|EcommerceBytes-NewsFlash, Number 2861 - August 02, 2012 - ISSN 1539-5065 3 of 6|
Amazon on Wednesday reiterated its call for federal legislation that would pave the way for states to begin requiring online sellers from out of state to remit sales taxes, urging members of the Senate Commerce Committee to rally behind the Marketplace Fairness Act.
In his opening statement at a hearing considering the bill, Paul Misener, Amazon's vice president for global public policy, rattled off a litany of objections to the proposal that have been raised over the many years that the issue has been up for debate, offering an answer to each.
Misener told lawmakers that the bill would not create a new tax, but instead facilitate the collection of one that is already due, but goes largely unpaid. He argued that the measure would be constitutional, citing a 1992 U.S. Supreme Court ruling that held that only the U.S. Congress, not individual states, could address this issue of interstate commerce.
And while some critics have characterized the bill as a Washington mandate, Misener said that it would afford the states a taxing authority that they do not have under the 1992 Quill vs. North Dakota ruling.
"Only by passing this legislation would sales-tax decision making devolve to the states," Misener said.
Misener had a generally sympathetic audience before the committee, many of whose members have signed on as co-sponsors to the Marketplace Fairness Act. Count among those the chairman of the panel, West Virginia Democrat John Rockefeller, who took pains to dispel one of the central objections to the measure, namely that it constitutes a new tax burden.
"To be clear this debate is not about imposing new taxes. It is not. Instead it's just allowing a state to collect taxes they are currently owed under existing law, but are being systemically avoided," Rockefeller said.
"If Congress does nothing, we'll end up with states forced to raise income or property taxes to offset the growing losses of sales tax revenue. That's just a fact," he added.
Steve DelBianco, the executive director of NetChoice, a coalition of businesses and trade groups that oppose new sales tax requirements, including eBay, appeared as the lone witness before the committee opposing the Marketplace Fairness Act, a position he readily acknowledged at the beginning of his testimony.
"As the only one of seven witnesses you've heard today who don't support the legislation, I sort of feel like the body at an Irish wake. Everyone expects me to be here but nobody really wants me to say anything," DelBianco said.
Under the bill, only states that took steps to simplify their tax codes would be eligible to require retailers to remit the taxes. But opponents of the bill have countered that the simplification provisions in the current version of the bill don't go nearly far enough to harmonize the roughly 9,600 state and local tax codes across the country.
DelBianco argued that stronger language on the harmonization of competing tax codes must be included to lessen the burden for small businesses, as well as the potential for legal penalties if a state fails to adhere to its simplification plan.
"There's nothing in this bill to allow businesses to sue for enforcement against the states," he said.
As in previous airings of the sales-tax debate, much of the disagreement on Wednesday focused on the complexity and expense of the software that sellers would use to account for the nuances of the various tax codes.
Steven Bercu, CEO and co-owner of BookPeople, a brick-and-mortar book seller in Austin, Texas, told lawmakers that the store's website runs software that automatically calculates the sales tax for out-of-state sellers. (Though BookPeople is not required to collect sales taxes on purchases made by out-of-state customers, Bercu said that he does so because it is the right thing to do.)
Bercu argued that new software applications that are cheaper and simpler have effectively made collecting the taxes a plug-and-play affair.
But DelBianco pointed out that he had purchased a book from the BookPeople website the morning of the hearing, it had miscalculated the sales tax, assessing the rate for Austin, rather than Virginia, where DelBianco lives.
Bercu could not account for the discrepancy, but pointed out that the Marketplace Fairness Act includes liability protections for sellers who use tax software programs that the states have approved.
DelBianco contended that the tax software that Bercu's shop has in place would not be nearly sufficient to meet the requirements of the Senate bill, and that any such integration would be a costly proposition involving complex installation and management at each point in the fulfillment chain.
He urged lawmakers to look past the assurance that the bill's backers offer that such software programs would be provided to retailers by the states at no cost. That's only the beginning of the story, he cautioned.
"Is it free? Yeah, it's fee like a puppy is free. They come with a lifetime of costs," DelBianco said of the software.
He also challenged the exemption for small businesses, which offers a pass on the sales tax obligations to sellers with annual revenues below $500,000. A similar bill in the House sets the exemption at $1 million. Lawmakers have indicated that those figures are not set in stone.
"We're ready to talk about what that right level of small-business exemption is," said Dick Durbin (D-Ill.), one of the co-sponsors of the Senate bill.
About the Author
About the author:
Kenneth Corbin is a freelance writer based in Washington, D.C. He has written on politics, technology and other subjects since 2007, most recently as the Washington correspondent for InternetNews.com, covering Congress, the White House, the FCC and other regulatory affairs. He can be found on LinkedIn here.
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