Amazon Supports Federal Bill for States to Collect Sales Tax on Online Purchases
Amazon, one of the world’s largest online retailers, officially revealed its position on states collecting sales tax from Internet retailers.
The company apparently “strongly supports” federal legislation permitting states to collect sales tax from Internet merchants, but only if a few companies are permitted to duck the requirements, according to a statement made by an Amazon executive during a congressional hearing.
Amazon supports “an evenhanded federal framework for states sales tax collection,” explained Paul Misener, Amazon’s vice president for global public policy, during Wednesday’s House Judiciary hearing.
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The company strongly supports the enactment of a federal bill with appropriate provisions, according to Misener.
A bill was introduced in early November by a bipartisan clutch of 10 senators that would permit states to mandate collecting sales tax for online and catalog retailers.
Under the current laws, online retailers are not required to collect state sales tax in states where they do not have a physical presence such as a retail location or office.
This gives them an advantage over local retailers, because they can undercut them by eliminating the tax.
“What we’re doing today is exploring the need for legislation to level the playing field between small business and online retailers,” said Rep. John Conyers of Michigan at Wednesday’s hearing. “Local mom-and-pop stores and other businesses suffer when they have to collect a sales tax but online retailers don’t.
States are missing an estimated $22 billion a year by not requiring online retailers to tax their customers.
This new bill would allow states to choose whether to collect sales tax from out-of-state businesses.
This Streamlined Sales and Use Tax Agreement would allow a state to collect sales tax after 90 days.
The new legislation helps to coordinate state tax rules and definitions and incorporates new technology.
States can decline joining the coalition, but would have to adopt certain simplification requirements to become eligible to collect sales tax.
In 1992, the United States Supreme Court’s decision in Quill v. North Dakota held that online retailers are not mandated to collect sales taxes in states where they do not have a physical presence.
However, it left room for Congress to further examine and resolve the issue.
By retail giant Amazon supporting the bill, there is a good chance it can be passed.
eBay, one of Amazon’s biggest rivals, issued a statement protecting small Internet retailers.
Allowing states to force them to collect sales tax “means that the shopper will be less likely to buy from small retailers on the Internet,” said Tod Cohen, eBay’s vice president and deputy general counsel, in his testimony at Wednesday’s hearing.
If the government does pass a bill, eBay supports protection for small business retailers.
