As retailers from around the country converge on Washington this week, they plan to press members of Congress to enact legislation addressing online sales taxes, along with a host of other measures on the National Retail Federation’s policy agenda.
The NRF’s annual Washington fly-in is bringing more than 150 retailers from about 30 states to the nation’s capital, where they will fan out across Capitol Hill on Wednesday for meetings with members of the House and Senate to lobby for action on a number of policy issues that the trade group anticipates could see action in what’s left of the legislative calendar.
“We will probably focus on issues that we believe will be moving relatively soon,” NRF spokesman Stephen Schatz told EcommerceBytes.
The NRF is billing the fly-in and an associated conference as an exercise in grass-roots advocacy, the type of outside-the-Beltway coalition building that it is encouraging with this week’s announcement of the Small Business Retail Council, a new unit of the trade group that will work to promote policy issues of concern to small and independent retailers.
“Working with our state retail association partners, we hope to amplify the voice of small retailers in advancing the retail community’s agenda,” NRF President and CEO Matthew Shay said in a statement announcing the new group.
In their meetings with lawmakers this week, retailers expect to raise a number of issues where legislation could improve the business environment for their sector, including reforms to guard against frivolous patent litigation, provisions to ease the expense of swipe fees for credit card transactions, and reforms to President Obama’s signature health care law.
But online sales tax legislation is among the top priorities NRF members will raise, and certainly one of the most closely watched in the divided online retail community.
The NRF has been lobbying in support of a bill that would allow states to require retailers in outside jurisdictions to begin collecting and remitting sales taxes on the purchases made by their residents. On that position, the NRF is aligned with Amazon, which has also been lobbying in favor of online sales tax legislation. It is squarely at odds with eBay, which has argued that new tax burdens would threaten to put small online sellers out of business.
Under current law, shoppers in states with sales tax laws are expected to report Internet purchases on which the tax wasn’t collected at checkout on their income returns, but in reality few consumers do.
As a result, brick-and-mortar retailers have argued that they are at a competitive disadvantage, and say the proposed legislation would close a loophole by allowing states to collect a tax that is already owed.
“The sales tax, it’s not a new tax. That’s the biggest misconception right now,” said Erin Calvo-Bacci, the co-owner of Massachusetts-based Bacci Chocolate Design who is among the retailers in Washington this week for meetings with legislators.
Without the authority to require online sellers to remit sales taxes, Calvo-Bacci argues that cash-strapped states will have to resort to other methods to recoup the lost revenue, like raising income taxes.
“As long as we’re seeing that steady growth of the Internet sales, if nothing’s done, where are our states going to be getting their revenue from?” she said. “Then they will be creating new taxes.”
Last May, the Senate approved the Marketplace Fairness Act, a bill that would authorize states to impose the sales tax collection requirement, provided that they took certain steps to simplify their tax code. Sellers with annual revenues under $1 million would be exempt from the requirement.
That measure has stalled in the House, though earlier this month, Sen. Mike Enzi (R-Wyo.) introduced the Marketplace and Internet Tax Fairness Act, a bill that pairs the online sales tax provisions with language that would extend the moratorium on taxes on Internet, what the NRF considers “must-pass” legislation.
“What we envision is that the Senate will probably expedite debate and discussion on the bill. That is going to happen relatively soon,” Schatz said. “We’re encouraged because it signifies that the supporters of sales tax fairness are continuing to press forward.”
The NRF sees the Internet access legislation as the best vehicle for enacting the sales tax measure. The group isn’t laying odds on passage, but with the expiration of the current moratorium on access taxes looming on Nov. 1 – and the House already having passed legislation making that embargo permanent – that deadline could spur lawmakers into action.
“No one wants to see Internet access taxes happen. That’s a bipartisan issue,” Schatz said. “We think we have the votes in the Senate. We think we have the votes in the House, it’s just a matter of getting it to the floor.”