Internet Sales Tax Bill Faces Hurdles

Though advocates hoped the long-fought-for legislation would finally pass this year, the IRS scandal and the immigration bill have pushed it to the back burner and it continues to face an uphill battle.
by | June 19, 2013

Advocates for online sales tax had hoped that 2013 might finally be the year their legislation passed.

Online retail behemoth Amazon -- a longtime opponent of the legislation -- had done an about face and come out in favor of the bill. Then, last month, the Senate overwhelmingly passed the legislation with support coming from both parties. But today, even some of the legislation's most ardent backers concede that the road ahead for the legislation will be a long one.

"I’m optimistic that something can be done, but there is still a lot of work that needs to take place," said Rep. Steve Womack, the Arkansas Republican who's co-sponsoring the House version of the bill.

Want more finance news? Click here.

Womack, at a Wednesday event touting the legislation alongside the National Governors Association and the National Conference of State Legislatures, said that the House has taken up a bevy of issues, like the IRS scandal and the immigration bill, that have shifted his Marketplace Fairness Act (MFA) to the back burner. "I understand that this particular issue competes with a lot of other issues that are on the plate of Congress right now," Womack said.

Despite having more than 60 co-sponsors, his bill has been stalled in the House Judiciary Committee for months with no sign of any action from its chairman, Rep. Bob Goodlatte, who's previously expressed skepticism of the legislation.

Meanwhile, House Speaker John Boehner has also outlined concerns with the bill, arguing it would be a "mess" to require businesses to collect taxes sales taxes based on 50 different tax codes (proponents say it's possible through the use of software).

The congressman said that he believes Goodlatte understands the underlying issue but wants wording of the legislation to be changed before it advances any further.

At this point, Womack said, he expects the legislation to pass one day, but he said he doesn't know when, and he declined to speculate on a timeline. To Womack, the only way to turn the tide for the MFA is "going to be through the stakeholders and their influence with their members."

"We’re going to have to personalize the issue," Womack said. "We’re going to have to demonstrate how there is a problem, the magnitude of the problem, and why that members of Congress should develop an appetite for discussing this," he said.

Womack said it is up to the states and the small businesses affected by the lack of sales tax collection from Internet retailers to show their members of Congress why they should care about the issue.

He emphasized the same talking point many advocates of the legislation have touted: brick-and-mortar businesses face an unfair disadvantage when they have to compete with Internet retailers who offer goods at lower prices due to their lack of taxation.

Dan Crippen, the executive director of the National Governors Association, tried to put a positive spin on the delays facing the House bill, saying it will simply give supporters more time to spread their message.

But Rep. Jackie Speier, the California Democrat co-sponsoring the bill, seemed more impatient. "States, counties, cities, across this country are waiting," she said. "Businesses large and small are waiting. The longer it takes Congress to act to address the unfairness in the retail market place, the more Main Street and brick-and-mortar businesses are going to suffer and eventually to crumble."

Join the Discussion

After you comment, click Post. You can enter an anonymous Display Name or connect to a social profile.

More from FedWatch