Amazon.com Inc. and brick-and-mortar stores urged U.S. senators to pass legislation to let states collect sales taxes from online retailers based elsewhere, as other Internet companies said they oppose the measure.
Federal legislation would create “an even-handed national framework for sales tax collection,” Paul Misener, vice president for global public policy at Amazon, the largest U.S. online retailer, told the Senate Commerce Committee.
The legislation would let states impose new and complex tax burdens for companies that would have to comply with 9,600 jurisdictions, Steve DelBianco, executive director of NetChoice, a group backed by EBay Inc., Oracle Corp. and Facebook Inc., said in written testimony for a hearing today.
“Amazon and big-box chains would benefit if Congress allows states to impose new tax-collection burdens on their smaller online-only competitors,” DelBianco said.
Amazon has been making tax agreements with states where it plans to expand its warehouses and shipping centers. Under a 1992 Supreme Court ruling, Web retailers only need to remit sales taxes to states where they have a physical presence.
Last year, the company said it would spend $500 million on facilities and add 10,000 full-time jobs in California by December 2015, ending a fight against a state law that taxes online sales. It will start remitting the levies in September if Congress doesn’t act, according to a statement from Governor Jerry Brown, a Democrat.
The Senate is considering a bill, S. 1832, introduced by Michael Enzi, a Wyoming Republican. Enzi told lawmakers the measure would close a loophole and benefit local businesses that have to collect sales taxes while online retailers don’t, according to the Congressional Record.
Enzi submitted letters of support from the National Conference of State Legislatures, the National Association of Counties and the U.S. Conference of Mayors.
“This bill doesn’t raise taxes,” Enzi said at today’s hearing. “It collects what’s owed by the purchasing individual.”
Senator Jim DeMint, a South Carolina Republican, said he opposes the measure.
“Let’s be clear about what this bill does: It mandates that online companies with no physical presence in the state collect sales taxes for any state that demands it,” DeMint said at today’s hearing. “This is a mandate on business.”
“Are they going to have to fill out a sales form and send it to every state?” DeMint said.
Seattle-based Amazon collects levies on sales to Washington state residents, as well as on transactions with customers in Texas, Kansas, Kentucky, New York and North Dakota, according to the company.
States have pressed Congress to act for years without results, and for a decade Amazon has backed changes in federal law that would ease Web sales-tax collection.
“Congress should authorize the states to require out-of-state sellers to collect the sales tax already owed,” Misener, the Amazon executive, said in today’s testimony. Technology can ease the burden of tax collection for small sellers, Misener said.
A House bill received a hearing July 24 at which Judiciary Committee Chairman Lamar Smith, a Texas Republican, said the Constitution doesn’t allow one state to tax other states’ retailers. As a result, “online retailers, who maintain a very limited physical presence and use common carriers to fill orders, enjoy a competitive advantage over traditional retailers,” he said.
Smith said a bill, H.R. 3179, sponsored by Arkansas Republican Steve Womack, would replace the physical-presence rule with a requirement that state and local governments simplify their tax policies if they want to collect sales taxes from out-of-state retailers.
Online-only companies can achieve as much as a 10 percent price advantage over brick-and-mortar retailers by not collecting state sales taxes, the Retail Industry Leaders Association said in a letter of support to Enzi that the lawmaker submitted to Congress.
The trade group, based in Arlington, Virginia, says it represents retailers including Wal-Mart Stores Inc., Target Corp. and Sears Holdings Corp.
The National Retail Federation, with board members including executives from Macy’s Inc. and Saks Inc., in a submission to the Commerce Committee today said Congress should pass Enzi’s bill.
“All that we want is a level playing field,” David French, senior vice president for the Washington-based group, said in an interview. “It’s only certain Internet sellers that don’t collect sales taxes.”
Washington-based NetChoice says Amazon is trying to suppress competition from smaller online merchants by requiring them to comply with separate tax requirements in the 45 states that have sales and use levies.