The apparel chain filed for bankruptcy in January and closed its e-commerce site and stores.
Two bills recently submitted in the U.S. Senate would provide for mandatory collection of sales tax by Internet and catalog retailers.
Two bills recently submitted in the U.S. Senate would provide for mandatory collection of sales tax by Internet and catalog retailers. The bills, submitted by Senators Michael Enzi (R, WY) and Byron Dorgan (D, ND), would provide the federal backing sought by the proponents of the Streamlined Sales and Use Tax Agreement, under which 19 states have agreed to simplify the collection of sales tax across state borders
“The states have acted,” said Enzi. “It is now time for Congress to provide states that enact the Streamlined Sales and Use Tax Agreement with the authority to require remote retailers to collect sales tax just as Main Street retailers do today. If Congress continues to allow remote sales taxes to go uncollected and electronic commerce continues to grow as predicted, other taxes, such as income or property taxes, will have to be increased to offset the lost revenue to state and local governments. I want to avoid that.”
The legislation would streamline the country’s more than 7,500 sales tax jurisdictions by permitting states that become voluntary members of the Streamlined Sales and Use Tax Agreement to require remote sellers to collect and remit sales and use taxes. A total of 19 states have already enacted legislation to change their tax laws and implement the requirements of the agreement.
The Direct Marketing Association, which represents catalogers, web retailers and other direct merchants, opposes the legislation and says it overlooks how difficult it is to collect taxes from 7,500 taxing jurisdictions. "Efficiency, simplicity and results are the ultimate goals of both business and government operations. Neither these legislative efforts, nor the voluntary agreement upon which they are based, accomplish these goals," said DMA president and CEO John A. Greco, Jr. "True sales tax simplification would require states to adopt standardized definitions and offer a single tax rate per state for all types and channels of commerce."
The National Retail Federation, which represents chain stores, supports the legislation. “On-line sellers, mail-order merchants and other remote sellers have an unfair price advantage when they don’t have to collect the sales tax that bricks-and-mortar stores collect every day from every customer,” NRF vice president and government and industry relations counsel Maureen Riehl said. “This legislation would not create a new tax. It would merely provide a mechanism to enforce tax obligations that are already on the books. If Congress doesn’t move quickly to close the loophole that is allowing an increasing number of purchases to go untaxed, state and local governments could be forced to raise property or income taxes to make up the loss.”