J.C. Penney Urges Congress To Tax E-Tailers

An in-house attorney for J.C. Penney testified before a congressional committee Thursday that e-tailers should be taxed, to "level the playing field" with brick-and-mortar retailers who already have to pay such taxes.

"We are here to ask you to level the playing field between sellers that collect sales tax and those who cannot be required to collect the tax because they do business in the community on a virtual rather than physical basis," J.C. Penney Corporation Inc. Vice President and Associate General Counsel-Tax Wayne Zakrzewski said. "Many of our competitors do not collect, which gives them a competitive advantage. This is not because they are innovative or provide incremental value to the consumer, but because the states do not have the ability to require collection of a tax that is due from the consumer."

Zakrzewski testified Thursday before the House Judiciary Committee's Subcommittee on Commercial and Administrative Law during a hearing on H.R. 3396, the Sales Tax Fairness and Simplification Act of 2007.

The National Retail Federation, which has been lobbying in favor of the act, said it would require out-of-state "remote seller" merchants to collect sales tax on merchandise sold to residents of their states. Retailers would be compensated for the cost of sales tax collection and collection could be outsourced to certified service providers, the NRF said, adding that retailers with less than $5 million in annual gross remote sales would be exempted.