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CEA, Retail Groups Urge Web Tax Fairness At House Hearing

Washington – The Consumer Electronics Association (CEA) joined brick-and-mortar advocacy groups on Capitol Hill today to argue the case for an even-handed Internet sales tax policy.

In testimony before the House Judiciary Committee, trade associations including the CEA, the National Retail Federation (NRF) and the Retail Industry Leaders Association (RILA) voiced their support for the Marketplace Equity Act, (H.R. 3179), a bipartisan bill that would allow each state to decide whether to enforce collection of its sales tax by online-only retailers.

The act also specifies ways that participating states must simplify their tax systems.

The bill, which was the subject of today’s Judiciary Committee hearing, addresses a 1992 Supreme Court decision that requires out-of-state sellers to collect sales tax only if they have a physical presence, or “nexus,” in the state.

“Today’s hearing made three things abundantly clear,” said RILA public affairs executive VP Karen Lugar. “The current system is broken and the loophole enjoyed by online retailers is unfair to local retailers; fixing the system and closing this loophole is not a new tax; and the time is right for Congress to finally act.”

In written testimony submitted to the Judiciary Committee, NRF senior VP David French argued, “As retailing evolves and Internet sales become a more prominent portion of total retail sales, it is critical that Congress support pro-small business reform of a broken sales and use tax collection system.”

 In a written statement submitted to Chairman Lamer Smith, Ranking Member John Conyers and members of the committee, CEA president/CEO Gary Shapiro noted, “There is a large loophole in the collection of state sales tax that is harming traditional brick-and-mortar retail businesses. The Marketplace Equity Act is an effective solution that will place all retailers on an equal playing field while assisting states in collecting approximately $23 billion in uncollected state sales taxes.”

Rather than enact a new tax, Shapiro said the bill “simply closes a loophole created by a decades-old Supreme Court ruling which has created unfair price disadvantages and placed an undue burden on consumers who do not realize they owe sales tax if it is not collected by the seller.

“CEA believes the Marketplace Equity Act represents the best thinking of all the stakeholders by providing a roadmap forward for states to collect sales taxes, simplify their sales tax statutes, and assist vendors with compliance, while providing for a robust small business exemption.”