By Marc Heller
Sept. 18 --The chairman of the House Judiciary Committee outlined his own priorities for online sales tax legislation, signaling a departure from a bill the Senate passed in May.
In detailing some of his goals for a measure Sept. 18, Chairman Rep. Bob Goodlatte (R-Va.) reignited the debate between proponents and opponents of expanded tax collection on Web-based purchases. Each side said it saw a victory in the “statement of principles.”
In a news release, Goodlatte listed seven goals for legislation, including avoiding unequal treatment, for tax purposes, of online versus brick-and-mortar retailers; giving out-of-state retailers greater ability to challenge another state's enforcement; simplifying sales tax regimes among states; and protecting state sovereignty.
Goodlatte didn't directly say he supports efforts to expand states' authority to collect sales tax from online retailers in other states. He said sales tax requirements should be no more or no less burdensome for online retailers than for other retailers, and that the principles are a starting point for discussion in the House.
Legislation would address the effects of a 1992 U.S. Supreme Court ruling, Quill v. North Dakota, 504 U.S. 298 (1992), which dictated that a state can't force retailers without a physical presence to collect sales tax on its residents' online purchases.
The Senate passed an online sales tax bill called the Marketplace Fairness Act (S. 743) on May 6. A nearly identical bill, H.R. 684, sponsored by Reps. Steve Womack (R-Ark.) and Jackie Speier (D-Calif.), has been referred to the Judiciary Committee .
“Americans across the country are affected by the issue of Internet sales tax whether they are consumers or business owners,” Goodlatte said in a news release. “I greatly look forward to hearing fresh approaches to this issue and continuing the discussion.”
Goodlatte also said the sales tax laws should be simple enough and compliance inexpensive enough that the legislation's exemption for businesses with less than $1 million in annual remote sales is unnecessary.
He also said states should be encouraged to compete to keep tax rates low, and that legislation should protect consumers' privacy--a provision one of the bill's critics, the NetChoice Coalition, told Bloomberg BNA had been included in prior years' versions but was left out of the latest bill approved by the Senate.
Goodlatte didn't say whether he will introduce legislation of his own or schedule a hearing; a retail industry lobbyist who attended a closed-door session Sept. 17 with Goodlatte and his staff told Bloomberg BNA that staff members told attendees an “issue hearing” might be held in this fall.
A Judiciary Committee aide told Bloomberg BNA that hearings are announced no more than one week ahead of time, and that none has been scheduled.
Opponents said Goodlatte's announcement signaled that the Marketplace Fairness Act as written has no chance in the Judiciary Committee.
“Chairman Bob Goodlatte showed his own form of heroics by stopping the Internet sales tax train from taking us all over the cliff. He released a set of principles which set this train on a new path--one without a cliff,” said Steve DelBianco, executive director of the NetChoice Coalition, in a blog post on its website.
The NetChoice Coalition includes such online retailers as eBay Inc. Proponents include many retailers who have told Congress they lose in-store sales to online competitors.
Big box retailers such as Target Corp. support the bill. Amazon.com Inc., which joined supporters in 2012, has expanded its physical presence in many states--triggering a requirement to collect sales tax under the Quill decision--and has also reached agreements with several state governments to collect sales tax.
Supporters said Goodlatte showed he wants to address the problem of uncollected taxes on online sales, which the National Governors Association reported cost states about $23 billion annually.
“These principles will serve as a legislative roadmap for advancing sales tax fairness legislation in the House of Representatives, and demonstrate that Congress is listening to the pleas of local, community retailers and merchants, who continue to face an unfair competitive disadvantage with their online competitors,” David French, senior vice president for government relations at the National Retail Federation, said in a news release.
Lobbyists following the issue said Goodlatte's reference to state enforcement indicates concern about states' ability to audit retailers in other states. In theory, a retailer may be susceptible to tax audits from any of the 46 states that charge sales tax, DelBianco said.
Goodlatte's principles also reinforced his previously stated skepticism about exempting small businesses from collecting sales tax. The exemption is set at $1 million a year in annual sales in the bill, and some critics have called for a much higher level, Womack said in conference call with reporters the week of Sept. 9 . Goodlatte signaled he would move in the opposite direction.
Womack, in a statement, said Goodlatte's principles help advance the issue.
“For over twenty years, this tax loophole has forced more and more of the small businesses that line our Main Streets to shut their doors. Congress must act to fix this injustice, and Chairman Goodlatte's principles are a huge step in that direction,” Womack said.
To contact the reporter on this story: Marc Heller in Washington at mheller@bna.com
To contact the editor responsible for this story: Cheryl Saenz at csaenz@bna.com
Text of Goodlatte's news release is at http://judiciary.house.gov/news/2013/09182013.html.