By Marc Heller
Feb. 10 — A congressman from
the home state of Overstock.com may play a key role in shaping legislation
enabling states to collect more taxes on online purchases.
Chaffetz (R-Utah) is working with sponsors of the Marketplace Fairness Act
(H.R. 684 and S. 743) and House Judiciary Committee Chairman Bob Goodlatte
(R-Va.) to refine the legislation to address opponents' concerns, a spokeswoman
for Chaffetz told Bloomberg BNA Feb. 10.
Chaffetz is not crafting a
specific bill but instead is working on concepts that would address Goodlatte's
priorities for online sales tax legislation, said Chaffetz's spokeswoman, M.J.
Henshaw. Goodlatte hasn't scheduled a hearing on the issue and is still
collecting ideas, a Judiciary Committee aide said.
Overstock, based in
Salt Lake City, is among a coalition of businesses that has joined against the
Marketplace Fairness Act. The legislation would allow states to compel
out-of-state online retailers to collect sales tax.
Governors Association has said states lose out on as much as $23 billion
annually in uncollected sales tax on remote sales. Most consumers don't declare
such purchases on state income tax returns as required, officials have
“We do think that a federal solution is achievable,” said Mark
Griffin, Overstock's senior vice president and general counsel. The group
opposing the bill is the NetChoice Coalition.
Griffin said Chaffetz
reached out to the company after Goodlatte in recent months asked him to work
on the issue. Overstock and Chaffetz have exchanged ideas about possible
changes to the bill, he told Bloomberg BNA.
Overstock, founded in 1999,
employs 1,492 people and reported $1.3 billion in revenue in 2013, according to
its Web site.
Goodlatte released a set of
principles for online sales tax legislation in September 2013, such as ensuring
that online retailers are treated equally with bricks and mortar stores; that
out-of-state retailers should have a viable way to challenge tax-related
actions by other states; and that state sovereignty is respected.
not commented extensively on the issue since then. A committee aide said
Goodlatte welcomes input from lawmakers, industry groups, state and local
governments and taxpayers and that he has received “several creative
Some of Goodlatte's concerns will be easier to address than
others, and the prospects of legislation passing in 2014, a midterm election
year, appear unlikely, Griffin said. He said he hopes Congress can set
groundwork for legislation that passes later, perhaps between the November
elections and the end of 2014, or in another year.
The primary sponsors
of the bill in the House are Reps. Steve Womack (R-Ark.) and Jackie Speier
(D-Calif.). The Senate version, sponsored by Sens. Mike Enzi (R-Wyo.) and
Richard Durbin (D-Ill.) passed the Senate in 2013.
The bill's critics have said it would force retailers to comply with a
maze of state sales tax regulations, including rates that vary among more than
9,600 taxing jurisdictions nationwide and don't uniformly apply to the same
types of products from state to state.
In addition, Griffin said,
Overstock fears having to appeal sales tax related cases to various state
courts around the country instead of to federal court—an issue tied to
Goodlatte's concern about retailers' appeal rights. “Venue matters to us,” he
From Overstock's perspective, Griffin said, inaction is preferable
to the Marketplace Fairness Act. But the current system has become a complex
mix of requirements from state to state, he said, as legislatures enact laws
compelling sales tax collection and redefining what constitutes a physical
presence in a state—the standard the U.S. Supreme Court set in the 1993 case
Quill v. North Dakota for triggering sales tax collection.
one of the reasons we're at the table,” Griffin said.
The legislation has support from Democrats and Republicans. How
it plays out with conservatives may determine how easily it can reach the
floor. Proponents see the issue as a matter of states' rights, said Jason
Brewer, spokesman for the Retail Industry Leaders Association, which supports
Proponents have worked to counter the argument that the bill
clears the way for a new tax, saying it merely improves compliance with sales
taxes that consumers are already supposed to pay, said Max Behlke, manager of
state-federal relations for the National Council of State Legislatures.
“We've proven it's not a new tax,” Behlke told Bloomberg BNA.
To contact the reporter on this story: Marc Heller in Washington at email@example.com
contact the editor responsible for this story: Cheryl Saenz at firstname.lastname@example.org
To view additional stories from Daily Tax Report register for a free trial now