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New Bill Would Require Online Sellers to Collect Sales Tax

The Marketplace Fairness Act failed to secure Congressional approval again last year, but was reintroduced in the Senate in March. This week, a different version surfaced in the House. Utah Rep. Jason Chaffetz introduced the Remote Transactions Parity Act of 2015 on Monday.

WE R HERE issued a statement against the act, saying it offers an inadequate and evaporating small business exemption that discriminates against platform sellers, and saying it “empowers tax collectors to roam the Internet for money.”

Retail groups including the National Retail Federation (NRF) and Retail Industry Leaders Association (RILA) issued statements showing their support for the bill. The NRF said the bill would “eliminate the online sales tax collection loophole, which distorts competition, the free market and unfairly favors online sellers at the disadvantage and expense of local communities, merchants and small business owners and their employees.”

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RILA said the legislation would “end special treatment for online-only retailers and give states the authority to require all retailers that sell products in their state to collect the same sales tax.”

A blog opposed to such legislation, Marketplace Fairness Coalition – A rebuttal, says the new bill has added protections for Certified Solutions Providers. It also noted that the Legislative Director for Rep. Chaffetz left the legislator to join one such software firm, Taxometry:

So the guy who drove/wrote the new remote sales tax bill for Congress jumped to the private sector to a pending Certified Solutions Provider (CSP) firm that would profit greatly if the bill was passed. He just started in May and the new bill is being introduced in June. What kismet!

And it’s only a coincidence that there is a lot of new language in the RTPA bill, compared to the Marketplace Fairness Act, that seems designed to explicitly help or protect these sales tax CSPs. It’s almost like CSPs wrote it. Hmmm.

We’re awaiting for a copy of the bill from Rep. Chaffetz’s office, a staffer told EcommerceBytes on Monday afternoon it hadn’t been numbered as of yet.

Update: Rep. Chaffetz’s office has not yet responded to our inquiry, but it issued a press release with more information. The bill is H.R. 2775, the Remote Transactions Parity Act (RTPA). It called out certain provisions of the bill including the following:

RTPA includes significant audit protections for small businesses – and, except in the case of intentional misrepresentation or fraud, exempts businesses under $5 million in gross receipts from remote state audits entirely.

Additionally, this legislation also exempts more small businesses from collection requirements in the first year – while the MFA only exempted businesses under $1 million in sales, the RTPA in the first year exempts small business under $10 million, phasing to $5 million in the second year and $1 million in the third.

Finally, the RTPA calls for states to give remote sellers the software needed to collect and remit the taxes due. It also requires states to pay for set-up, installation, and maintenance costs on the software.

The full statement is available on the representative’s website, and it includes links to the full text of the bill and a list of the bill’s supporters.

Meanwhile, eBay provided EcommerceBytes with the following statement on the proposed legislation on Monday evening:

The Remote Transaction Parity Act, like the Marketplace Fairness Act, discriminates against small businesses that operate online by holding them to an entirely different and more complicated tax scheme, relative to brick and mortar stores. Just like the MFA, the bill enables states to impose their sales tax rules on small businesses outside of their borders, threatening their success with multiple audits and litigation. We will continue to work with lawmakers to advance polices that ensure small businesses – regardless of their business model – can use the Internet to grow and create jobs.

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Ina Steiner

Ina Steiner is co-founder and Editor of EcommerceBytes and has been reporting on ecommerce since 1999. Send news tips to ina@ecommercebytes.com.


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