Effort to tax online sales continues

With a new Congress seated this week and promises of wrangling on big issues like the Keystone pipel

With a new Congress seated this week and promises of wrangling on big issues like the Keystone pipeline, Obamacare and immigration, it’s anybody’s guess whether a new version of the Marketplace Fairness Act will catch attention.

The bill passed the U.S. Senate in 2013 but didn’t come up for a vote in the House before the 113th Congress closed up shop in December — despite a last-ditch push by advocates.

The legislation, to allow states to collect sales taxes from online retailers, just as they do from local stores, died as the session ended.

Longtime supporters say the bill will be back in some form in the new Congress. But just don’t call it a “new” tax or an “Internet tax.” Those misperceptions fanned opponents who even called out local Rep. Chris Gibson, R-Kinderhook, on Facebook for being among the many House co-sponsors of the bill, labeling it (in capital letters) “a brand new tax.” Ted Potrikus, president of the Retail Council of New York State, said misunderstanding about the legislation “remains a sticking point.”

“It takes more than a five-second sound bite to explain that MFA [Marketplace Fairness Act] as written is the simple application of a state’s current sales tax structure on items sold on the Internet,” he told me by email. “So perhaps the biggest sticking point is the MFA’s inherent resistance to sound bites!” Potrikus’ Albany-based trade group, whose members range from mom-and-pop shops to national retailers, supported passage of the legislation. It was among the nearly 600 signers of a letter sent by an organization formed around the bill, the Marketplace Fairness Coalition, urging House Speaker John Boehner to take action before 2014 ended.

The letter said brick-and-mortar stores “are burdened with a government-sanctioned price disadvantage compared to their online competitors” — a reference to the 1992 U.S. Supreme Court decision that “remote sellers” — mail-order, telephone and, now, Internet merchants — don’t have to collect sales taxes in states where they lack a physical presence.

New York got around that hurdle in 2008 when it passed what is known as a click-through nexus law (also called the Amazon Tax) that said an out-of-state seller is presumed to have a connection to the state if it pays a commission to someone in-state who, through an Internet link, refers customers to the seller’s website.

Other states have followed New York’s lead, and now 12 states have nexus laws on the books while a dozen more have policies that mimic the laws — meaning half the states in the country that levy sales taxes on retail purchases require that online vendors collect and remit the taxes.

It gives credence to the declaration by one advocate of the Marketplace Fairness Act, who vows to keep fighting in the new Congress, that “this is going to pass because it needs to happen.”

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