White House supports Internet sales tax as bill advances in Senate
By Jay Keller
The White House on Monday backed legislation to grant states the authority to impose an internet sales tax and compel online retailers, or remote sellers, to collect state tax at the time of purchase.
The Marketplace Fairness Act cleared its first procedural hurdles in the Senate on Monday and approval of the measure would put online retailers under the same requirements as local, brick-and-mortar retailers as long as the state moves to simplify sales-tax laws in an effort to make multistate collection easy.
When asked by reporters if President Obama supports the legislation, White House Spokesman Jay Carney threw up support for the measure in Monday’s briefing.
“We believe that the Marketplace Fairness Act will level the playing field for local small business retailers who are undercut every day by out-of state online companies,” Carney said.
Carney said the administration believes that local, small-business retailers who follow the law are put at a disadvantage to big, online companies who don’t pay state taxes.
“[B]ecause these out-of-state companies are able to cut corners and play by a different set of rules, cities and states lose out on funding for K-12 education, police and fire protection, access to affordable health care and funding for roads and bridges,” Carney added.
Carney closed the question by citing the president’s support for the bipartisan measure, saying that governors, mayors and the business community are all in favor of leveling the playing field so local neighborhood-based small businesses can compete.
Proponents of the legislation say that states seeking collection authority for online purchases have two options: join the 24 states that have already voluntarily adopted the simplification measures or independently meet five simplification mandates listed in the bill.
The five mandates include notifying retailers ahead of any state rate changes, establish state-run bureaucratic process to handle things like sales tax registrations, filings and audits.
Requirements also include establishing a uniform sales-tax base for use throughout the state and implementing sales tax destination sourcing to match rates for out-of-state purchases.
Lastly, a state would be required to “provide free software for managing sales tax compliance and hold retailers harmless for any errors that result from relying on state-provided systems and data.”
Opponents of the bill predict a bookkeeping nightmare, citing the fact that some states do not have a sales tax or by admonishing having to build a new system from the ground up.
Analysts and watchdogs predict a fight in the House over the measure but many say that the voice of the hometown retailers will likely prevail over naysayers.