House Tables E-Fairness Legislation: Indies Look to States to Level Playing Field

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Late last week, Speaker of the U.S. House of Representatives John Boehner dashed any hopes Main Street retailers had of getting a federal e-fairness solution passed during the lame-duck Congressional session.

On Wednesday, December 3, a group of House representatives and advocates met with Speaker Boehner in a last-ditch effort to bring sales tax fairness legislation to the House floor for consideration, as reported by Roll Call. However, their efforts proved unsuccessful, ultimately ending any chance for passing e-fairness legislation this year.

“We had a robust discussion, and everybody knows how everybody feels,” Rep. Steve Womack (R-AR) told Roll Call. Womack, who introduced sales tax fairness legislation (The Marketplace Fairness Act of 2013 [H.R. 684]), organized the meeting, which included about 30 House Republicans, among them co-sponsors of the bill and members of the Judiciary Committee.

Co-sponsor Rep. Mark Amodei (R-NV) told Roll Call that the Speaker’s office said Boehner was “committed to getting it done, but not this year.” Asked whether he was confident that this would happen in 2015, Amodei replied, “Ask me that same question again in February.”

With a federal solution tabled at least until January, when a new Congress convenes, it is likely that even more states will join such states as New York and California and pass their own sales tax fairness legislation to level the playing field and recoup lost sales tax.

“We are strongly disappointed with the Speaker and House leadership for disregarding the voice of small business and tabling sales tax fairness in the lame-duck session, especially considering the legislation had such wide bipartisan support,” said ABA CEO Oren Teicher. “Promises of ‘wait until next year’ ignore the long-standing, inequitable strategic disadvantage that ABA’s bookstore members and other Main Street retailers face. While we continue to strongly support a federal solution, we also expect that in the coming year states will take steps to level the playing field for all retailers, and we will support them in those efforts.”

Already, many states have taken action to implement sales tax fairness, as ABA’s recently released E-Fairness Map  shows. Out of the 45 states that collect sales tax, 33 have moved to recoup lost sales tax revenue by passing a law and/or striking a deal with to collect sales tax in exchange for opening a facility. Nineteen of the 33 states have passed some form of sales tax fairness law.

States such as New York have passed affiliate nexus laws, which require remote retailers with a broad network of affiliates in the state to collect and remit sales tax in the state. As a result, in a number of these states Amazon fired its affiliates, and the retailer also challenged the law in New York. However, the law was upheld by three state courts, and the U.S. Supreme Court refused to hear appeals of those rulings in December 2013.

In Michigan, according to the Detroit Free Press, state legislators are considering multiple bills (H.B. 4202 and H.B. 4203) that would clarify the definition of what constitutes a physical presence in the state, such as online affiliates or warehouse or storage space. There are two bills in the Senate that are similar to the House bills, the article noted. The Detroit Free Press reported that the bills have the support of Michigan retailers and small-business owners in the state, and could be voted on this week.

And, according to the Lansing State Journal, the Michigan Senate Fiscal Agency said that a sales tax fairness law could generate an additional $50 million a year in tax revenue for state and local governments.

State Rep. Robert VerHeulen (R-Walker), the sponsor of H.B. 4203, told the Free Press that the bill is a matter of fundamental fairness. “We’re requiring the bricks-and-mortar retailers to collect the tax,” he said. “So, we’re creating a level playing field with this.” Rep. Eileen Kowall (R-White Lake) is the sponsor of H.B. 4202.

ABA is urging Michigan booksellers to reach out to their state legislators to let them know that they support these bills.

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