In its second-largest acquisition, Amazon buys the company for $970 million.
Hundreds of industry groups and individual companies have submitted a letter to the U.S. House Judiciary Committee chairman calling on him to act on a House version of an online sales tax bill the Senate passed last spring.
The online sales tax bill that the U.S. Senate overwhelmingly passed last spring must get through the House in 2014 or start over again when the next Congress is seated in January 2015. With that in mind, a coalition that claims to represent millions of companies is off to an early start this year to keep the legislative momentum alive and moving ahead.
“We are writing to start off the New Year to urge immediate action on legislation to create marketplace fairness and make the 2013 holiday shopping season the last where Main Street businesses must compete at a government-created price disadvantage,” the Marketplace Fairness Coalition says in its Jan. 7 letter U.S. Rep. Robert Goodlatte’s (R, VA), chairman of the House Judiciary Committee, which is considering the Senate bill.
The letter lists more than 300 signatories, including 174 trade associations and dozens of retailers among 137 individual companies. The merchants on the list range from retail giants like Amazon.com Inc., Gap Inc. and The Home Depot, Nos. 1, 19 and 46 in the Internet Retailer Top 500, to the family-owned Pealer’s Flowers & Co. in Camp Hill, PA, and Book Nook, a “locally owned & independent since 1969” store based in Monroe, MI.
While Amazon long opposed online sales tax proposals, it has switched sides in recent years as it built distribution centers throughout the U.S., forcing the e-retailer to collect sales tax in more states. Amazon will soon collect sales tax in states representing more than half the U.S. population.
The letter doesn’t mention the Senate-passed Marketplace Fairness Act by name. But the inclusion of “marketplace fairness” in the coalition’s name and in the letter’s language clearly shows the coalition’s hope of seeing the House pass legislation along the lines of the Senate bill. The measure would overturn existing federal law and allow states to mandate collection of sales tax by online and catalog merchants whether not they have an in-state physical presence. Federal law currently allows states to require sales tax collection only by retailers that have stores, warehouses, offices or some other physical presence in a state.
The coalition contends that the rapid growth of e-commerce is unfairly favoring web-only retailers currently exempt from collecting sales tax in states where they have no physical presence. The coalition cites a July 2013 study by economist Arthur Laffer, who served on President Reagan’s Board of Economic Advisors, projecting economic benefits from the Marketplace Fairness Act that would revitalize the retail industry and generate more employment. “We believe it is crucial for Congress to address this problem to project millions of jobs,” the coalition says in the letter.
The coalition’s letter also expresses support for the principle Judiciary Committee chairman Goodlatte laid out last fall for amending the Senate bill to make it easier for online merchants to collect sales tax from the nearly 10,000 state and local jurisdictions that have sales taxes.
Stephen Kranz, a Washington, DC-based attorney who specializes in sales tax issues at the Chicago law firm McDermott Will & Emery LLP, says the coalition’s support of the legislation—including, for the first time, direct support by the U.S. Chamber of Commerce, a member of the coalition—is likely to push Congress to move on a House version that would then get reconciled with the Senate bill. “I could easily see this issue moving forward during 2014,” he says.
Kranz says that recent court decisions that took opposing positions on state laws requiring online retailers to collect tax if they do business with in-state affiliate web sites—a New York law was allowed to stand, while an Illinois law was struck down—puts more pressure on Congress to pass a new law that will provide consistency in online state sales tax policies.
Kranz adds that a House bill is likely to clarify how retailers will be compensated for the costs of collecting online sales tax and remitting it to states.
Rep. Goodlatte’s office declines to comment on the coalition’s letter, but a legislative aide notes that it continues to welcome comments. The Judiciary Committee, however, is not actively drafting a House version of the Senate bill.