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Washington and Massachusetts Push for Remote Sales Tax Legislation

  • Nov 27, 2012 | Gail Cole

Outgoing Washington Governor Chris Gregoire (D) and Massachusetts State Treasurer Steven Grossman are urging the Federal Government to pass legislation that would require certain out-of-state retailers to collect sales tax.

Governor Gregoire, who leaves office in January of next year, recently released a statement in support of remote sales tax collection. She began with:

"Washington's main street businesses continue to battle unfair competition from Internet and mail-order retailers that fail to collect sales taxes. Congress could address this disparity by finally passing legislation that would treat large, out-of-state sellers the same as local businesses, requiring them to collect sales tax… ."

The governor has been working toward this end for the past year, and thinks that the "current lame-duck session of Congress is the best time to pass the measure." She has said that reaching an agreement is a top priority.

On the other side of the continent, Treasurer Grossman wrote to U.S. Senate Finance Committee Chair Max Baucus (D. Montana):

"I am urging you to support, and your committee to approve, federal enabling legislation such as the Enzi-Durbin bill to allow states to implement uniform Internet sales tax laws."

Mr. Grossman told the Senator that it "is simply contrary to sound public policy to penalize companies that actually invest in a brick-and-mortar presence in a community."

Both the governor and the treasurer are calling this "an issue of Main Street fairness."

The Massachusetts Treasurer told Senator Baucus that the issue "is a matter of fairness and equity to Main Street businesses. Local retailers and other merchants should not have to compete with online sales giants that do not have to collect state and local sales taxes." He called the current law a "disincentive for residents to shop at local businesses… ." Likewise, Governor Gregoire reminded that "[b]usinesses should compete on price, quality and service, not on the ability of one class of competitor to avoid collecting sales tax."

Main street fairness aside, both states would welcome revenue generated by a remote sales tax. Washington State faces a $900 million shortfall; and "an estimated $558 million in state and local taxes" could be generated in Fiscal 2013-15 if federal legislation is adopted. Similarly, researchers predict that Massachusetts could lose $783 million in sales tax revenue by 2020 unless the federal government implements "uniform Internet sales tax laws." While both Washington and Massachusetts residents should pay a consumer use tax on items purchased without sales tax from remote vendors, few actually do.

The 2012 holiday shopping season is under way, and brick-and-mortar businesses across the country are hoping it will be the last with what Jan Teague, President and CEO of the Washington Retail Association, calls "special treatment for online-only sellers."

Does your business sell online? Find out if you are ready to collect online sales tax.

photo credit: alles-schlumpf via photopin cc

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Gail Cole
Avalara Author
Gail Cole
Gail Cole
Avalara Author Gail Cole
Gail began researching and writing about sales tax in 2012 and has been fascinated with it ever since. She has a penchant for uncovering unusual tax facts, and endeavors to make complex sales tax laws more digestible for both experts and laypeople.