Weekly Round-Up: The Outlook for Federal E-Commerce Tax Legislation in 2012

Stakeholders are hopeful for an opportunity to advance federal legislation in 2012 that would allow states to require online and remote retailers to collect and remit state sales taxes despite a bleak outlook in Congress and tough opposition on a small business exemption, Liz White writes in this week’s issue of the Weekly State Tax Report.

The previous year saw growing momentum on the issue across the states and in Congress, with several pieces of federal legislation gaining attention from business leaders and lawmakers. The issue of how states can make online and distant retailers collect and remit taxes without a nexus in the state has been growing for about a decade, but no federal legislation has ever proceeded to a vote.

Recent years have seen a change in how big businesses treat the issue. Amazon.com Inc., for example, previously answered state legislation with litigation, but has recently begun making deals with states and pushing Congress for federal action.

Amazon's new cooperation illustrates how the push for federal legislation has changed, as more large companies join the call for Congress to act. In 2011, Wal-Mart and Best Buy, along with other “big box” retailers, supported the federal proposals. Other large online companies, like eBay and Overstock.com, have remained opposed to legislative efforts for various reasons.

Budget shortfalls also have pushed the movement forward, with more states seeking to make up lost revenue through online sales tax, Rachelle Bernstein, vice president of tax counsel with the National Retail Federation, told Bloomberg BNA. States, which are losing about $24 billion in sales tax revenues to online retailers, have started talking about the issue more seriously and that has been important for giving federal legislation a chance to succeed, she said.

There is strong bipartisan support for legislation, but the question is whether Congress has an appetite for major legislation in an election year, Jason Brewer, vice president of communications and advocacy for the Retail Industry Leaders Association, told Bloomberg BNA.

White’s complete article on this issue can be read in its entirety here.

In other developments…

eBay and Amazon spar again over online sales taxes, Kenneth Corbin, of EcommerceBytes.com, reports.

The Federation of Tax Administrators releasesa list of 2012 state sales tax holidays.

A new paper on the Urban Institute and Brooking Institution's Tax Policy Center website, by Brian Galle and Kirk J. Stark, looks at federal tools for preventing state budget crises.

Kate Thurber, of PWC, looks atlegislation in Tennessee that would require preapproval for intangible expense deductions.

Compiled by Priya D. Nair
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