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Congress Intros Web Tax Bill, With Amazon Blessing


A long-anticipated plan to streamline
state and local tax collection on e-commerce sales was
introduced into the House and Senate late last month.

However, passage of the Democrat-backed legislation
remains uncertain within a bitterly divided Congress.

Dubbed the Main Street Fairness Act, the bill is cosponsored
by Senators Dick Durbin
(D-Ill.), Tim Johnson (D-S.D.) and
Jack Reed (D-R.I.), and Representatives
John Conyers (D-Mich.), Peter
Welch (D-Vt.) and Heath Shuler

“This bill will level the playing
field for local businesses by ensuring
that online retailers collect the
same sales taxes that brick-andmortar
retailers already do,” said
Conyers. “This will help our state
and local governments avoid devastating
layoffs and cuts to essential
services vital to the well-being
of our local communities.”

Added Welch, “When a consumer
can walk into a store, try out a
product and then go home and buy it online without paying
sales tax, Main Street businesses and downtowns

As do state coffers. According to Durbin, states are expected
to lose as much as $24 billion in uncollected state
and local taxes on Internet and catalog sales next year,
while his home state of Illinois has lost an estimated $153
million annually from 2005 to 2010.

Specifically, the bill would certify the Streamlined Sales
and Use Tax Agreement, a comprehensive interstate system
to harmonize and simplify sales tax rules and administrative
requirements that has been adopted by 24 states,
but requires congressional approval under the Supreme
Court’s 1992 “Quill” decision.

The legislation also provides a lengthy list of simplification
requirements to ease administrative burdens for
sellers, exempts small businesses, and compensates retailers
for startup administrative costs associated with collecting
sales taxes.

The bill is publicly supported by a raft of retail lobbying
groups, including the National Retail Federation (NRF)
and the Retail Industry Leaders Association (RILA), as
well as individual retailers, including Sears and, of all companies,


The king of e-commerce has long argued that it already
pays taxes in about half of the markets where it does business,
and welcomes a federal solution that streamlines tax
rules and administrative requirements across all jurisdictions.

has long supported a simple, nationwide
system of state and local sales tax collection, evenhandedly
applied to all sellers, no matter their business model,
location or level of remote sales,”
Amazon global public policy VP
Paul Misener said in a letter to Dick
Durbin last month. “To this end, I
am writing to thank you for your bill
that would allow states that sufficiently
simplify their rules to require
collection of sales tax by out-ofstate

Sears, which for the time being
is based in Durbin’s home state of
Illinois, said the legislation “will restore
balance and fairness to the
system by enabling states to enforce
the collection of taxes that
are already owed by every customer
making a purchase, whether
the purchase is online or in a retail
store. This is a critical step in addressing an issue that has
resulted in over a decade of unfair competition between
retailers who collect the sales tax and those who refuse
to do so … With this legislation, states will be allowed to
require online-only sellers to collect the tax at the point
of sale just as they do with retailers who have a physical
presence in the state.”

In April, Best Buy CEO Brian Dunn predicted that ecommerce
taxation will become a national issue once
Durbin’s bill is introduced. “It’s just a matter of time before
the playing field is leveled,” he said during a company analysts’
conference (see TWICE, April 18).

Wal-Mart Stores, which along with Sears and Best Buy
is a founding member of the Alliance For Main Street Fairness,
a big-box coalition, is a proponent of state-level efairness
legislation, and offered a more tacit endorsement
of the bill. In a recorded earnings call last week, president/
CEO Mike Duke said, “We’re encouraged by the growing
interest in a federal response to this issue … and we will
remain engaged in the debate in Washington.”

Outright opponents of the bill, which include the Electronics
Retailing Association (ERA) and eBay, argue that
despite the promised exemption, small businesses will assume
an unfair burden in implementing the tax plan compared
to national chains.