Internet Sales Tax Not Dead Yet, Says Congressman Who Can Kill It

Contrary to some news reports, a bill to let states collect sales taxes from out-of-state online retailers isn't dead yet, Virginia Rep. Bob Goodlatte said last week. Goodlatte chairs the U.S. House Judiciary Committee, which is considering the bill, so he will decide whether the bill ever makes it to a floor vote.

But he hasn't made that decision yet. The inaccurate news reports came about because in the time since the U.S. Senate passed the Marketplace Fairness Act in early May, some opponents have been furiously lobbying Goodlatte to kill the bill in committee. After Goodlatte made comments to a Virginia TV station that the station interpreted as meaning the bill would be killed, one lobbying group trumpeted the news and congratulated itself for killing the bill by bombarding Goodlatte's Facebook page with anti-online-sales-tax comments.

Not so, Goodlatte said in a statement: He has serious concerns about the existing bill, but he's open to considering online sales-tax legislation.

"To be clear, if any action is taken, Congress must be involved in the process and the House Judiciary Committee is looking at alternatives that could enable states to collect sales tax revenues without opening the door to aggressive state action against out-of-state companies. Furthermore, any alternative in the House would address fairness to all businesses and consumers," Goodlatte told the Washington Examiner.

That's exactly what Goodlatte was saying before the TV report aired on Thursday (June 6). It's impossible to know precisely what Goodlatte said that confused the TV reporter, since the only on-air sound byte from Goodlatte was pretty innocuous: "Transactions on the Internet are going to increase. It's obviously something where we want to make sure that the many, many businesses in this community who do business online and you don't see them because they don't have storefronts are treated as fairly."

Still, it's clearer than ever that Goodlatte doesn't like the extra expense and complication that dealing with sales-tax collection in 45 states would mean for online retailers, even though there's a $1 million threshold for out-of-state sales and states would be required to provide software for calculating the taxes.

At least some Republican congressmen say they support the bill because it's not actually a new tax; almost all states with sales taxes have laws on the books that require consumers to pay the sales tax themselves if they buy something out of state. Retailers including Walmart (NYSE:WMT) and Amazon (NASDAQ:AMZN) and retail groups that include the National Retail Federation and the Retail Industry Leaders Association continue to lobby for online sales-tax collection in some form, while eBay (NASDAQ:EBAY), other online retailers and some anti-tax groups are lobbying against it.

That means the fight over the tax-collection bill is likely to get more heated as the Congressional session wears on.

For more:

- See this Phoenix Business Journal story
- See this WSLS-TV story 
- See this Webinar

Related stories:

Online Sales-Tax Bill Passes Senate, With An Uncertain Future In The House
Ebay CEO: No, Really, We're Not Against Online Sales Taxes, Honest!
Online Sales Taxes March Forward, While Ebay Rallies Its Anti-Tax Troops