House Judiciary Committee Chairman Robert Goodlatte (R-Va.) has released his much anticipated principles designed to guide discussion on Internet sales tax and the Marketplace Fairness Act, a bill that would allow the enforcement of existing sales and use tax laws on goods sold over the Internet. As a legislative priority, NACo supported the Marketplace Fairness Act of 2013 (S. 743) that passed the Senate in May of this year.
Although Goodlatte has not been supportive of the Senate-passed version, the release of his principles acknowledges that the inability to collect sales taxes on online purchases hampers local brick-and-mortar businesses, and hurts state and local governments.
Goodlatte’s seven principles are intended to guide discussion, although no clear timeline for House legislative action has been revealed. The principles are:
- Tax relief – No new or discriminatory taxes should be created for Internet users.
- Tech neutrality – All business, whether exclusively online or brick and mortar, should be on equal footing with no particular model having any additional burden or advantage.
- No regulation without representation – Those who would bear state taxation, regulation and compliance burdens should have means to protest unfair, unwise or discriminatory rates and enforcement.
- Simplicity – The law should be so simple for businesses to comply with that a small-seller exemption would be unnecessary.
- Tax competition – Governments should be encouraged to compete with one another to keep tax rates low and American businesses should not be disadvantaged compared to foreign competitors.
- States’ rights – States should be sovereign within physical boundaries and the federal government should not mandate that states impose sales tax compliance burdens, and
- Privacy rights – Sensitive customer data must be protected.
Enacting marketplace fairness legislation, a top NACo priority, would not only create a level playing field for local businesses, it would also grant state and local governments the ability to enforce existing sales tax laws and stop the loss of billions of dollars in uncollected sales taxes in e-commerce every year, estimated to be more than $23 billion in 2012.