Federal Internet Sales Tax Parity/Marketplace Fairness Making Progress in House

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The quest for internet sales tax parity made another stride late last week, when House Judiciary Chairman Rep. Goodlatte (R-Virginia) released a set of guiding principals on the tax collection issue, which are listed below. Earlier this year, the Senate passed the bill, S. 744, and sent it to the House. However, Rep. Goodlatte has indicated that he wants to develop a new “simpler” bill than S. 744 or H. 684 – which is the House version of the Senate-passed bill. This is still a significant step forward on the issue, which many thought wouldn’t get any action on the House side. Please ask your Congressional Representative to ask Chairman Goodlatte for a hearing on this issue. While exact estimates are hard to come by, Michigan is expected to generate hundreds of millions of dollars from this tax which goes uncollected.

House Judiciary Committee Principles on Internet Sales Tax

  • Tax Relief – Using the Internet should not create new or discriminatory taxes not faced in the offline world. Nor should any fresh precedent be created for other areas of interstate taxation by States.
  • Tech Neutrality – Brick & Mortar, Exclusively Online, and Brick & Click businesses should all be on equal footing. The sales tax compliance burden on online Internet sellers should not be less, but neither should it be greater than that on similarly situated offline businesses.
  • No Regulation Without Representation – Those who would bear state taxation, regulation and compliance burdens should have direct recourse to protest unfair, unwise or discriminatory rates and enforcement.
  • Simplicity – Governments should not stifle businesses by shifting onerous compliance requirements onto them; laws should be so simple and compliance so inexpensive and reliable as to render a small business exemption unnecessary.
  • Tax Competition – Governments should be encouraged to compete with one another to keep tax rates low and American businesses should not be disadvantaged vis-a-vis their foreign competitors.
  • States’ Rights – States should be sovereign within their physical boundaries. In addition, the federal government should not mandate that States impose any sales tax compliance burdens.
  • Privacy Rights – Sensitive customer data must be protected.

Summer Minnick is the Director of Policy Initiatives and Federal Affairs. She can be reached at 517-908-0301 or sminnick@mml.org.