Sales tax parity legislation introduced in Congress

Lawmakers introduced federal legislation this week that would require online sellers to collect sales tax the same as local stores.

U.S. Sen. Michael Enzi, R-Wyo., reintroduced the Marketplace Fairness Act (S. 976), legislation that passed the Senate in 2013 but never received a vote in the House. Meanwhile, U.S. Rep. Kristi Noem, R-S.D., reintroduced the Remote Transactions Parity Act. Noem’s bill has not yet been assigned a number.

While the details vary, both bills would allow states to require out-of-state sellers to collect sales tax regardless of whether they have a physical presence in a customer’s state. Under a 1992 U.S. Supreme Court ruling, out-of-state sellers can be required to collect only if they have a physical presence such as a store, warehouse or office.

Various bills that would effectively overturn the Supreme Court ruling have been introduced in Congress over the past 15 years but none have won final passage. In the past two years, several states, including Alabama, have made efforts to collect the taxes nonetheless.

Since Oct. 1, 2015, retailers without stores in Alabama have been able to voluntarily collect and remit a use, or sales, tax from Alabama customers under the Simplified Seller Use Tax Remittance Act. The act has been modified twice since then, including during the Alabama Legislature’s 2017 regular session. This year’s revisions are effective July 1. Alabama has collected an additional $24 million in taxes from online and other remote sellers since 2015 thanks to the act and a subsequent Alabama Department of Revenue rule. While the state’s action has made the playing field somewhat more level, federal legislation is necessary to end the unfair advantage online sellers have over Main Street retailers.

This article is part of the Alabama Retail Report, a communication for Alabama Retail Association members. Not a member? Join us!

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