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State Lawmakers Urge Congress to Pass MFA… Again

  • Nov 19, 2014 | Gail Cole

 The answer is worth millions.

House Speaker John Boehner has dug in his heels with respect to internet sales tax legislation, stating unequivocally that “it won’t move forward” during the lame duck session. Ever optimistic and determined, proponents of the Marketplace Fairness Act are not giving up.

When the Senate overwhelming approved the Marketplace Fairness Act of 2013 in May 2013, supporters of online sales tax were ebullient. But then nothing happened, and nothing happened some more. In September 2013, House Judiciary Committee Chairman Bob Goodlatte (R-VA) released principles to guide the online sales tax discussion, and then held a hearing on the topic in March 2014. There was no resolution. Since then, there have been calls to action and some lobbying activity, but the full House has not yet taken up the issue.

In spite of the lack of action in Washington, online sales tax has been gradually spreading. Numerous states have imposed some sort of affiliate sales tax law, called Amazon tax laws after the Numero Uno online seller. And Amazon, which has lobbied in support of federal internet sales tax legislation, now collects sales tax in 23 states—significantly more than in 2013.

National Governors Association

Yesterday, the National Governors Association (NGA) published “What Governors Are Saying About Marketplace Fairness” on its website, after prefacing that “states fail to collect more than $23 billion from transactions conducted over the Internet or through catalogues” every year:

“The explosive growth of electronic commerce – more than 10 percent annually – means states’ sales tax bases are eroding and increasing states’ reliance on other revenue streams. The Marketplace Fairness Act supports the collection of taxes that are already owed to states, encourages competition and benefits consumers.”

Governors from the following states wrote in favor of allowing states to tax internet and catalogue sales when the sellers do not have a physical presence in their states:

  • Alabama
  • Arkansas
  • Iowa
  • Kentucky
  • Rhode Island
  • South Dakota
  • Tennessee
  • Utah
  • Vermont
  • West Virginia
  • Washington

On November 18, the NGA also sent a letter to Congressional leaders John Boehner, Nancy Pelosi, Harry Reid and Mitch McConnell, calling on Congress “to combine the Marketplace Fairness Act (MFA) with a temporary extension of the Internet Tax Freedom Act (ITFA) and pass the measure this year.” The letter expressed disappointment that Congress “is not willing to even consider MFA,” and asked that Congress “stop stalling.”

National Council of State Legislatures

The governors aren't alone. Earlier this week, the National Council of States Legislatures sent a letter to Mr. Boehner, urging him allow the Marketplace Fairness Act (or similar legislation) to come to a vote in the House, or to "include it in legislation to fund the federal government in 2015."

The letter also notes that "legislation to give states the authority to require the collection of sales taxes by remote sellers has been under review by the Judiciary Committee for more than 12 years and the subject of numerous hearings."

Politics as usual

Supporters of MFA say the time to act is now. Mr. Boehner says he won’t act.

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Sales tax rates, rules, and regulations change frequently. Although we hope you'll find this information helpful, this blog is for informational purposes only and does not provide legal or tax advice.
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.