ARLINGTON, Va. — The National Association of Chain Drug Stores applauded the Senate’s passage of legislation that would applying similar sales tax laws to online retailers and brick-and-mortar stores.
NACDS said Tuesday that the Senate approval of the Marketplace Fairness Act (S. 743) by a vote of 69-27 signals a move to "even the playing field" between online merchants and traditional retailers.
Under the Marketplace Fairness Act, states could require retailers with more than $1 million in annual sales to collect state and local sales taxes for online purchases. Currently, the law requires an online retailer to collect sales tax only on products shipped to states in which the retailer has a physical presence, such as a store or a distribution center.
"This legislation would modernize sales tax policy to reflect the marketplace as it exists today," NACDS president and chief executive officer Steve Anderson said in a statement. "When it comes to updating this outdated policy, every day of inaction is another day of discrimination against brick-and-mortar retailers. NACDS commends the Senate for true leadership in recognizing a necessary change for fairness and fiscal responsibility."
Since the Internet’s growth into a major retail sales channel, retailers and retail trade groups have complained to lawmakers that online merchants have enjoyed an unfair price advantage over brick-and-mortar stores by not having to charge sales tax. Only relatively recently, as more states have passed laws, have many Internet retailers begun regularly collecting sales taxes on purchases in states where they have a physical presence.
The National Conference of State Legislators estimated that the current laws have prevented states from collecting $23 billion in sales tax revenue.
"The law and its interpretation by the courts date back to the pre-Internet era," Anderson noted. "There is no way the Marketplace Fairness Act can be labeled a ‘new tax’ with a straight face. It is a long-overdue application of existing sales tax laws. The only thing new here is fairness."
