Senators Ask for Passage of MFA in House, as Online Business Associations Prepare for Fight
Four senators urged the passage of the Marketplace Fairness Act (MFA) (HR-684) in the House on the first anniversary of the bill’s passage (http://1.usa.gov/1l3qARM) in the Senate (WID May 8/13 p2), on the Senate floor Tuesday night. The MFA would “authorize” states to collect an e-commerce sales tax from out-of-state Internet retailers making more than $1 million in sales. Sens. Lamar Alexander, R-Tennessee, Dick Durbin, D-Illinois, Mike Enzi, R-Wyo., and Heidi Heitkamp, D-North Dakota, spoke in support of the bill, framing it as a states’ rights measure. Online business associations we spoke with strongly objected to the bill’s passage, saying it would hurt small businesses.
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Since the Senate’s passage of the MFA, “a lot of great work has been done to educate members on the truth of the legislation,” said the MFA’s House sponsor Steve Womack, R-Arkansas, in a statement (http://1.usa.gov/RomevA) Tuesday. HR-684 isn’t a “new tax; it is a commonsense bill that levels the playing field for retailers who cannot compete against an unfair tax advantage,” he said. “I am hopeful the House can find the will to close this loophole once and for all.” The bill has 66 co-sponsors in the House (http://1.usa.gov/1inOkBe).
Internet retailers that make less than $1 million in sales don’t fall under the MFA, said Durbin. For those making more than $1 million in sales, “states have to provide you with the software so your business does not run into the expense” of determining how to collect the tax, he said. The software can be bought for between $15 and a “couple of hundred dollars at the most,” he said. The bill says the software to determine sales and usage taxes are to be provided without charge (http://1.usa.gov/1iYjaBX). We couldn’t reach Durbin to clarify whether he was referring to states or businesses themselves purchasing software. Amazon supports the MFA, because it doesn’t “want to fight this battle in 50 states,” he said. “Let’s just make it uniform across the country.” Amazon could not be reached for comment, but has supported the MFA (WID March 22/13 p3).
The MFA “gives states the right to decide for themselves whether to collect or not collect state sales taxes that are already owed,” said Alexander. The bill “closes a tax loophole that prefers some businesses over other businesses and some taxpayers over other taxpayers,” he said. “Out-of-state businesses are being subsidized because they don’t have to collect sales taxes -- taxes that are owed -- and local businesses do.”
Some argue the MFA is a “federal imposition of a tax,” but “nothing could be further from the truth,” said Heitkamp. “This is a tax that is already owed” to the states, she said. Legislators are “doing nothing more than telling every state: If you want to pursue Main Street fairness, you have a path forward,” she said, using the term favored by pro-tax advocates. The bill isn’t about “raising taxes,” said Enzi. “It isn’t about taxing the Internet, and it isn’t about taxing Internet access,” he said, adding, “I think we are all opposed to that.”
"The Senate MFA left an awful mess for the House to deal with,” which gave “states vast powers to audit and tax out-of-state businesses, without requiring significant simplification of state tax systems,” said Steve DelBianco, NetChoice executive director. House Judiciary Committee Chairman Bob Goodlatte, R-Va., was “up to the challenge” and created “principles designed to protect small businesses,” he said. Goodlatte has “signaled that MFA is the wrong way, and asked for alternative concepts that meet his principles,” he said.
Goodlatte’s principles (http://1.usa.gov/QfpwQG) were designed to ensure that any House legislation on the subject is simple and doesn’t create a new tax burden for consumers. Goodlatte said in May 2013 that he would be “more thoughtful” about e-commerce sales tax legislation, after the Senate’s passage of the MFA.
A year after Senate Majority Leader Harry Reid, D-Nev., and Durbin “rammed” the MFA “through the Senate over bipartisan opposition, it’s clear that opponents of this fundamentally flawed bill have momentum on their side,” said Executive Director Phil Bond of the Web Enabled Retailers Helping Expand Retail Employment, a retail association for small businesses, in a statement. Goodlatte is offering a “thoughtful set of reasoned principles” that levels the “playing field, rather than the Senate’s anti-small business bill passed at the behest of Walmart and Amazon,” he said. A Walmart spokeswoman confirmed the company supports the MFA.