Retailers Urge Subcommittee to Approve Sales Tax Bill
WASHINGTON, D.C., October 1, 2003 — The National Retail Federation today asked the House Judiciary Committee’s Subcommittee on Commercial and Administrative law to approve H.R. 3184, the Simplified Sales and Use Tax Act of 2003. The subcommittee is scheduled to hold a hearing on sales tax simplification this afternoon.
“Remote sellers have claimed for years that state sales tax systems were too complicated for a retailer in one state to know what sales tax to charge a customer from another state,” said NRF Vice President and State and Government Relations Counsel Maureen Riehl, who is scheduled to testify at today’s hearing. “That’s no longer true. The states have been busy simplifying their sales tax systems and there’s no longer any excuse for not collecting the sales tax customers owe.”
“For NRF, simplification means certainty,” Riehl said. “We have certainty now that we did not have before. We know what the definitions are, we know what rate an item will be taxed at and we know if it is taxed at all. Simplification has finally given us a clear roadmap toward sales tax fairness for all merchants. The legislation now before Congress is the next stage of that trip.”
“It is important that Congress provides a legislative remedy for this issue before we are all forced to accept a litigation remedy,” Riehl said. “States have gone to court before to try to collect the sales tax that is owed them, and the loss of revenue that has come in recent years could lead them back to the courthouse. Litigation will only produce a hodgepodge of rulings across the country that would complicate sales tax further, not simplify it. We need congressional action now.”
Riehl said that merchants who don’t have to collect sales tax from most of their customers enjoy a price advantage equal to the amount of the sales tax – an average of 6 percent nationwide. In an industry where profit margins range between 3 percent and 4 percent, that amounts to significant discrimination against Main Street bricks-and-mortar stores. NRF supports a level playing field for all merchants, she said.
H.R. 3184 was introduced September 25 by Representatives Ernest Istook, R-Okla., and William Delahunt, D-Mass. Senators Michael Enzi, R-Wyo., and Byron Dorgan, D-N.D., are expected to introduce a companion bill in the next several days.
The legislation would allow states that implement the Streamlined Sales and Use Tax Agreement to require that out-of-state retailers collect sales tax when selling to their residents. The bill would require that the states provide “reasonable and uniform compensation” to retailers for collecting the sales tax and sets other standards for administration and court jurisdiction. All remote sellers, including mail-order, telephone and Internet merchants, would be affected but companies with less than $5 million in gross remote annual sales would be exempt.
The Streamlined Sales and Use Tax Agreement was developed in response to a U.S. Supreme Court ruling that said “remote sellers” could not be required to collect sales tax from out-of-state customers because state sales tax laws were too complex to know how much to charge. Approved by 31 states in November 2002, the agreement sets uniform definitions and other standards to provide retailers with certainty and make it easier for a merchant in one state to collect sales tax from a customer in another state.
NRF is the world`s largest retail trade association with membership that comprises all retail formats and channels of distribution including department, specialty, discount, catalog, Internet and independent stores. NRF members represent an industry that encompasses more than 1.4 million U.S. retail establishments, employs more than 20 million people — about one in five American workers — and registered 2002 sales of $3.6 trillion. NRF’s international members operate stores in more than 50 nations. In its role as the retail industry`s umbrella group, NRF also represents 32 national and 50 state associations in the United States as well as 36 international associations representing retailers abroad. For more information, visit our web site at www.nrf.com.
Contact:
J. Craig Shearman
(202) 626-8134
shearmanc@nrf.com
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