PublishedJuly 23, 2012

House Holds Hearing On Online Sales Tax Legislation

The Computer & Communications Industry Association continues to oppose H.R. 3179, the Marketplace Equity Act, on which the House Judiciary Committee will be holding a hearing July 24.  The bill would allow states that have fulfilled certain simplification requirements to require out-of-state retailers to collect sales and use taxes on purchases made to residents of their states, regardless of physical presence.  However, this “simplification” would still leave in place thousands of different state and local tax jurisdictions that online retailers would have to comply with.  The bill would impose tax collection burdens on small Internet businesses, which are some of the most promising candidates for future economic growth.

The following can be attributed to CCIA President & CEO Ed Black:

“Those calling for the collection of online sales taxes talk of ‘fairness’ and ‘leveling the playing field.’  However, the assumption that having online retailers collect sales taxes would result in a fair balance is mistaken.  The compliance burden of managing a complex system of multiple tax jurisdictions is not comparable to collecting at a physical store for just that one jurisdiction.  If the burdens are different, it would only result in a new imbalance.

“E-commerce has enabled businesses to broaden the scope of their activities beyond traditional geographic limitations.  It is neither fair nor equitable to negate their achievements and place a compliance burden on online retailers for daring to utilize a new legitimate business model that does not fit well with a sales tax system based on physical location.

“Drafting online companies into tax collection duties may be a convenient way for state governments to get at revenue, but penalizing businesses for utilizing technology and innovation would be a shortsighted targeting of new revenue models, while protecting existing business models at the expense of consumers and growth.”

“We need policies that recognize the value of innovation and new business models like e-commerce, rather than penalizing and taking advantage of their creativity in the name of ‘fairness’ or ‘equity’.”

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