Sales tax legislation on retailers’ shopping list
WASHINGTON — Brick-and-mortar retailers and online sellers are using the holiday shopping season to step up their lobbying on a bill that would expand collection of billions of dollars in state sales taxes.
So if you order something online or from your favorite catalog this holiday season, your shipment might come with a plea to write Congress to oppose the bill. Walk into your local jewelry store, and you might hear the other side of the issue.
At least 156 companies, trade groups and lobbying firms are seeking to influence Congress on the Marketplace Fairness Act, according to lobbying disclosures filed with the Secretary of the Senate. The bill would allow states to collect sales taxes across state lines — even from companies located in other states.
Lining up in favor are governors, mayors, grocers, Realtors and shopping centers — including retail giants like Sears, Wal-Mart and Target. They argue they’re put at a disadvantage because they have to collect state sales taxes on every sale — while online retailers don’t.
Catalog companies, direct marketers, cigar makers, e-commerce companies like eBay, and Overstock.com, as well as anti-tax groups are lobbying against the bill. They argue that collecting sales tax for more than 9,000 jurisdictions is overly complicated, and opens them up to costly audits from 45 state tax collectors.
The National Conference of State Legislatures estimates that states lost $23 billion in uncollected sales tax revenue from out-of-state sales last year.
The Senate version of the bill — with an exemption for businesses with less than $1 million in annual sales — passed in May, 69–27. The House Judiciary Committee has not yet held hearings. So why the attention to it now?
“One of the reasons you see all this activity going on in the Christmas season is that the holidays are critically important for retailers,” said David French, top lobbyist for the National Retail Federation. “We’re afraid that if another holiday season goes by without Congress addressing this, we won’t see some of these stores by next Christmas.”
It’s also the time of year when retailers most often have contact with their customers. A group calling itself the True Simplification of Taxation Coalition — made up of catalog, direct mail and online retailers — is including literature about the bill with each order shipped, along with a postcard to send to the House Judiciary Committee.
“This has to be done in a way that doesn’t put us out of business,” said Hamilton Davison, president of the American Catalog Mailers Association. “It’s not the tax, it’s the cost and complexity of compliance, and the confusion for our customers.”
Traditional retailers are also stepping up their efforts. Last week, a coalition of retailers, called the Alliance for Main Street Fairness, sent a letter to House Judiciary Committee Chairman Bob Goodlatte urging him to support the bill.
“We believe that congressman Goodlatte is fighting for us, but we’re just trying to put the fire in his belly,” said Jane Johnson, a jeweler and City Council member in Salem, Va., in Goodlatte’s district. She complains that she must collect a 5.3% markup that Internet retailers don’t — on top of the cost of maintaining a storefront and contributing $16,000 a year to local charities.
The campaign is highlighting mom-and-pop stores in districts represented by members of the committee. But Joshua Baca of DDC Advocacy, the Washington political strategy firm coordinating the campaign, didn’t deny that retail giants like Wal-Mart are also footing the bill for the Main Street lobbying effort. “The great thing about e-fairness is that this is a good opportunity for all brick-and-mortar retailers, big and small, to band together to support this,” he said.