By Marc Heller

Proponents of legislation to expand collection of sales taxes on online purchases are making a final push to secure passage during the lame-duck session of Congress, and some told BNA Nov. 19 they believe they have reached the critical threshold of 60 votes in the Senate.


“We see this as our seven-week window,” said Claire Burghoff, spokeswoman for Rep. Steve Womack (R-Ark.), sponsor of the Marketplace Equity Act (H.R. 3179). “I do know that we’ve gotten traction.”


Capitol Hill aides and lobbyists told BNA the week of Nov. 19 that negotiations continue toward a compromise between Womack’s legislation—which he proposed with Rep. Jackie Speier (D-Calif.)—and Senate bills sponsored by Sens. Richard Durbin (D-Ill.) and Mike Enzi (R-Wyo.).


The Senate bills are the Marketplace Fairness Act (S. 1832), proposed by Enzi and supported by Durbin; and the Main Street Fairness Act (S. 1452), proposed by Durbin (186 DTR G-4, 9/26/12).


Measures Vary on Simplification


All of the bills clear the way for states to require remote sellers, with no physical presence in the state, to collect sales taxes. But the measures vary in how they encourage simplification of sales taxes among the states, as well as in how they treat small businesses that complain about having to meet the mandate.


A chief point of negotiations remains the level of sales a retailer needs in order to be exempt from the requirement, lobbyists and aides told BNA. Womack proposed that businesses with sales of less than $1 million should be exempt, and Durbin has proposed a level of $500,000.


Lobbyists working on the issue say the issue is not whether an exemption will be offered, but at what level—although Rep. Robert Goodlatte (R-Va.) and others have questioned whether any exemption should be offered for online retailers, given that small “bricks and mortar” stores are not exempt from collecting sales taxes.


Top Priority for Governors Association


The “Marketplace” bills have generated the most discussion, and a compromise measure will probably be framed after them, said David Quam, a lobbyist at the National Governors Association, which has been pressing for the legislation. The NGA considers the issue a top priority, he said.


A growing number of state governors have joined the pro-sales tax cause, saying they lose out on millions of dollars in uncollected taxes. Some retail trade groups have signed on as well, complaining that traditional stores that have to collect taxes are at disadvantage to online competitors.


The issue came up at a recent meeting of the National Council of State Legislatures’ taxation task force, said Steve Del Bianco, executive director of the NetChoice Coalition and an opponent of the bills proposed in Congress.


Del Bianco represents online retailers and other groups opposed to the sales tax mandate. Among other complaints, they say sales tax regulations remain too complicated and inconsistent from jurisdiction to jurisdiction for retailers to collect accurately and consistently.


Future of Streamlined May Be at Stake


DelBianco told BNA that he cautioned the task force that the bills from Womack and Enzi allow states to simplify their sales tax rules—and qualify for the new tax collections—without joining the Streamlined Sales and Use Tax Agreement, an arrangement among states to set standards for sales tax collection.


If states can collect taxes without joining the Streamlined effort, the Streamlined Sales Tax Governing Board could fade away, DelBianco said, along with its efforts to simplify taxes from state to state.


“If the Governing Board goes away, you’ll still hear from the business community at these meetings. We’ll complain to you about states that are making tax collection more complex than ever, and you’ll hear about lawsuits too,” DelBianco said he told the task force.


But giving states the option not to join the SSUTA may be key to passing legislation, said Susan Haffield, a partner in the Minneapolis office of PricewaterhouseCoopers. In a Nov. 20 webcast on retailers’ sales tax challenges, Haffield said lawmakers from big states that are not members of the Streamlined effort—such as New York and California—might be more inclined to support legislation that allows those states to boost sales tax collections without the mandate to join the Streamlined agreement.


“That would be one reason to be optimistic,” Haffield said.


DelBianco acknowledged that legislation following the model of the “Marketplace” bills may become law in 2012 and that proponents have gained momentum. But the legislation’s route to passage remains unclear; a Senate aide working on the issue at the Senate Finance Committee told BNA Nov. 19 there is no plan to take up the sales tax bill “right now,” given the major issues lawmakers face before the end of the year.


On the other hand, Senate Majority Leader Harry Reid (D-Nev.) has spoken favorably about passing legislation on the sales tax issue, and Durbin is the Senate’s second-ranking Democrat.


Reproduced with permission from Daily Report for Executives, 225 DER A-13 (Nov. 23, 2012).
Copyright 2012 by The Bureau of National Affairs, Inc. (800-372-1033) <>