Online Sales Taxes Have A New Framework For House Version

Internet sales taxes may not be dead after all, but they're likely to look much different when the House of Representatives gets through with them. On Wednesday (Sept. 18), House Judiciary Committee chairman Bob Goodlatte released a set of principles that he said would be central to a House alternative to the Marketplace Fairness Act that the Senate passed in May.

The list of seven principles makes it clear that Goodlatte wants to reduce the burden on online retailers by simplifying the process even further than the Senate bill did, and giving them streamlined processes for dispute resolution with the dozens of state taxing authorities they may have to deal with.

The principles also call for state governments to be "encouraged to compete with one another to keep tax rates low," which seems unlikely.

For brick-and-mortar retailers who have backed the bill, the good news is that the bill may not languish in committee the way it did for years in the Senate. The principles have plenty of Republican-friendly buzzwords, including states' rights, competition and tax relief.

But none of that will satisfy anti-tax Republicans who have said they will oppose any bill that would allow states to collect sales taxes from retailers who aren't located in the state. In June, 16 House members signed a letter opposing the Senate bill, but less-vocal Republican opposition is probably much higher, according to the Wall Street Journal.

The principles issued by Goodlatte are:

  • Tax Relief—Using the Internet should not create new or discriminatory taxes not faced in the offline world. Nor should any fresh precedent be created for other areas of interstate taxation by States.
  • Tech Neutrality—Brick & Mortar, Exclusively Online, and Brick & Click businesses should all be on equal footing. The sales tax compliance burden on online Internet sellers should not be less, but neither should it be greater than that on similarly situated offline businesses.
  • No Regulation Without Representation—Those who would bear state taxation, regulation and compliance burdens should have direct recourse to protest unfair, unwise or discriminatory rates and enforcement.
  • Simplicity—Governments should not stifle businesses by shifting onerous compliance requirements onto them; laws should be so simple and compliance so inexpensive and reliable as to render a small business exemption unnecessary.
  • Tax Competition—Governments should be encouraged to compete with one another to keep tax rates low and American businesses should not be disadvantaged vis-a-vis their foreign competitors.
  • States' Rights—States should be sovereign within their physical boundaries. In addition, the federal government should not mandate that States impose any sales tax compliance burdens.
  • Privacy Rights—Sensitive customer data must be protected.

For more:

- See this Washington Post story
- See this Wall Street Journal story

Related stories:

Webinar: The New Tax Reality--How the Marketplace Fairness Act May Impact Your Business
Internet Sales Tax Not Dead Yet, Says Congressman Who Can Kill It
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!