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WASHINGTON — Trade associations representing thousands of retailers have thrown their support behind proposed federal legislation that would require online merchants and other remote sellers to collect sales tax.
The National Association of Chain Drug Stores, the National Retail Federation (NRF) and the Retail Industry Leaders Association all say the Marketplace Fairness Act that was introduced last month by Rep. Mike Enzi (R., Wyo.) is needed to help level the playing field for brick-and-mortar retailers.
“Enactment of the Marketplace Equity Act would help preserve Main Street businesses that are critical to the economic vitality of their communities and empower states to address their budget challenges without raising taxes or adding to the federal deficit,” NACDS said in a statement that was submitted earlier this month to the Senate Committee on Commerce, Science and Transportation, which was examining the impact of Web-based purchases being free from sales tax on state and local levels.
The law that is being proposed by Enzi would close a loophole that puts retail brick-and-mortar businesses at what the trade organizations say is a competitive disadvantage with online retailers.
A 1992 Supreme Court ruling (commonly referred to as the Quill decision) created the loophole, which prohibits states from requiring Internet and other remote sellers to collect sales and use taxes owed on purchases from out-of-state vendors.
“This loophole not only disadvantages brick-and-mortar retailers, it also ties the hands of cash-strapped states, preventing them from collecting the sales taxes owed to them,” NACDS president and chief executive officer Steve Anderson said in letters the association sent to several congressional leaders.
Similarly, NRF maintains that a requirement for online retailers to collect sales taxes would go a long way toward strengthening local communities, protecting consumers and jobs, and providing for a stronger and more competitive marketplace.
“Brick-and-mortar retailers are major contributors to the health of local communities and should not be placed at a disadvantage compared to remote [and online] sellers that have no local presence,” NRF vice president David French says.
“This disadvantage is not created by the marketplace, but rather it is imposed by the current state of the law following the Quill decision, stifling retailers across the country,” he asserts.
