WASHINGTON, D.C. — Legislators in the U.S. House and Senate have introduced separate bills that attempt to close the loophole permitting online merchants to avoid charging state sales tax for internet purchases if they do not have a nexus in the state.
The pieces of legislation take different approaches to ending unfair competition caused by this loophole, according to the Auto Care Association, which supports passage of both bills.
The ability of online merchants to avoid charging state sales tax puts brick-and-mortar retailers at a price disadvantage, the ACA said.
The Tire Industry Association also supports passage of the bills "so that local family-owned businesses in the tire industry can compete fairly with large online corporations," according to Roy Littlefield IV, director of government affairs.
"These bills address very important issues for our members and we will expand our legislative efforts with its introduction to gain support in Congress," he added.
The House bill — Remote Transactions Parity Act (H.R. 2193) — seeks "to grant states the authority to enforce state and local sales and use tax laws on remote transaction," while the Senate bill — Marketplace Fairness Act (S. 976) — seeks to "restore states' soverign rights to enforce state and local sales and use tax laws…."
The bills target "remote sellers, persons "that make remote sales in the state without a physical presence" with annual sales exceeding $1 million.
Reps. Kristi Noem, R-S.D., and John Conyers Jr., D-Mich., introduced the House bill with bipartisan support, while Sens. Mike Enzi, R-Wyo., Dick Durbin, D-Ill., Lamar Alexander, R-Tenn., and Heidi Heitkamp, D-N.D., are responsible for the Senate version.
The ACA cautioned that another bill addressing the issue, titled, "No Regulation Without Representation," by Sen. John Tester, D-Mont., would codify the requirement that only a seller with a physical presence in the state can collect sales tax. The association calls this bill "misleading" and "unfair" and is urging all senators to oppose it.
The ACA is encouraging brick-and-mortar retailers to contact their federal legislators to urge passage of both S. 976 and H.R. 2193.