For over 50 years, Bloomberg BNA’s renowned flagship daily news service, Daily Tax Report® has helped leading practitioners and policymakers stay on the cutting edge of taxation and...
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.
Rep. Jason 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.
The National 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 said.
“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.
He has 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 ideas.”
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 said.
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.
“That's 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 the bill.
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 firstname.lastname@example.org
To contact the editor responsible for this story: Cheryl Saenz at email@example.com
All Bloomberg BNA treatises are available on standing order, which ensures you will always receive the most current edition of the book or supplement of the title you have ordered from Bloomberg BNA’s book division. As soon as a new supplement or edition is published (usually annually) for a title you’ve previously purchased and requested to be placed on standing order, we’ll ship it to you to review for 30 days without any obligation. During this period, you can either (a) honor the invoice and receive a 5% discount (in addition to any other discounts you may qualify for) off the then-current price of the update, plus shipping and handling or (b) return the book(s), in which case, your invoice will be cancelled upon receipt of the book(s). Call us for a prepaid UPS label for your return. It’s as simple and easy as that. Most importantly, standing orders mean you will never have to worry about the timeliness of the information you’re relying on. And, you may discontinue standing orders at any time by contacting us at 1.800.960.1220 or by sending an email to firstname.lastname@example.org.
Put me on standing order at a 5% discount off list price of all future updates, in addition to any other discounts I may quality for. (Returnable within 30 days.)
Notify me when updates are available (No standing order will be created).
This Bloomberg BNA report is available on standing order, which ensures you will all receive the latest edition. This report is updated annually and we will send you the latest edition once it has been published. By signing up for standing order you will never have to worry about the timeliness of the information you need. And, you may discontinue standing orders at any time by contacting us at 1.800.372.1033, option 5, or by sending us an email to email@example.com.
Put me on standing order
Notify me when new releases are available (no standing order will be created)