Congress introduced a bill Friday that would establish a federal framework for collecting sales tax from online retailers. The bill would provide a federal solution to the growing issue of states seeking to collect billions in taxes from online transactions.
Sen. Dick Durbin and Reps. John Conyers and Peter Welch released the Main Street Fairness Act in hopes to relieve consumers of the legal burden of reporting to state tax departments the sales taxes they owe on online purchases and help governors and mayors collect taxes they are owed and reduce the need to raise new taxes.
The bill, which is cosponsored by Sens. Tim Johnson and Jack Reed, as well as Rep. Heath Shuler, has received support from Amazon and Sears Roebuck & Co. and is backed by the National Governors Association and the National Retail Federation.
“Consumers shouldn’t have to face the burden of reporting all of their online purchases. Main Street retailers collect sales taxes on behalf of consumers, why shouldn’t online retailers do the same?” Durbin said. “In 2012, states across the country, including Illinois, are expected to lose as much as $24 billion in uncollected state and local taxes on internet and catalogue sales.”
“From 2005 to 2010, the state of Illinois estimated it lost $153 million each year,” he added. “The Main Street Fairness Act doesn’t ask anyone to pay a single penny more in taxes. Instead, it would help governors and mayors collect taxes that are already owed.”
According to PCMag, a collection of organizations opposed the bill, which they said would place an unnecessary cost burden on small businesses. Durbin argued, however, that small businesses would be exempted from collecting online taxes, subject to the governing board of the agreement.
EBay led the opposition, which was joined by the the Electronics Retailing Association, the Computer and Communications Industry Association, TechNet and the National Taxpayers Union, among others.
The Main Street Fairness Act would certify the streamlined sales and use tax agreement, provide states who choose to use it with the clear authority to require retailers to collect sales taxes already owed, require the streamlined sales and use tax agreement to meet a lengthy list of simplification requirements to ease administrative burdens for sellers and exempt small businesses from collecting sales taxes.
It would also compensate retailers for startup administrative costs associated with collecting sales taxes, treat retailers equally regarding sales tax collection, release consumers from their existing sales tax remittance obligations and help states and localities collect billions in taxes that are already owed.
“Introduction of your bill returns the discussion of interstate collection of sales tax to Congress, which the Supreme Court says is the appropriate forum to resolve the issue,” Paul Misener, Amazon’s vice president for global public policy, wrote in a letter to Durbin. “Amazon looks forward to working with you and your colleagues in Congress to help enact sales tax collection legislation.”