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Fred Clements: Sales tax reform gaining momentum

Published February 3, 2014
A blog by NBDA executive director Fred Clements.

Editor's note: This blog post was written by Fred Clements, executive director of the National Bicycle Dealers Association. Clements' previous blog posts can be read on bikedealerblog.wordpress.com.

Several independent bicycle dealers are planning to participate in March 4 Congressional meetings in Washington, D.C., to push for sales tax reform.

This comes at a time when there is some apparent movement on this issue in the House of Representatives to address the problem of brick-and-mortar businesses being required to collect sales tax while their direct competitors, Internet retailers, often do not.

The bicycle dealers will be joining a larger group of independent businesses from several industries under the umbrella of the Advocates for Independent Businesses (AIB). Meetings are being arranged by the American Booksellers Association, an AIB member.

The meetings may be well-timed because there appears to be some movement in the House of Representatives where reform efforts had stalled. The Senate approved tax fairness legislation, the Marketplace Fairness Act, in May of last year. The House version had languished, with leaders indicating it had very little chance of being either considered or approved.

The Congressional Quarterly reported this week that there is new momentum from House Republicans. Rep. Jason Chaffetz of Utah confirmed that he is working with Judiciary Chairman Robert W. Goodlatte of Virginia on an alternative to the Senate-passed legislation. The Judiciary Committee is overseeing this issue.

Chaffetz said the previously-approved Senate bill has no chance of being considered in the House. He predicted there would be House action on an alternative later this year. Rep. Steve Womack of Arkansas, the sponsor of the House companion bill (HR 684) to the Marketplace Fairness Act, confirmed that he was now working with Chaffetz on a measure that is designed to address his concerns.

One concern would be a desire to give states the ability to make their own decisions on how to enforce online sales taxes, rather than federal control proposed in the Marketplace Fairness Act. Chaffetz was quoted as saying he considered this a state’s rights issue. He is also pushing for no exemption for businesses under $1 million that is included in the Senate bill. This is probably a good thing for bicycle retailers who frequently compete with small on-line retailers.

Last September, Goodlatte issued a list of principles for an online sales tax bill, Congressional Quarterly noted. He called for the need for equitable treatment of online vendors and local merchants, urged measures to ensure states cannot discriminate against out-of-state retailers, and wanted a process for businesses and other taxpayers to appeal unfair or discriminatory taxes.

The AIB lobbying day includes a group of associations, including the National Bicycle Dealers Association. Others include the American Independent Business Alliance, American Specialty Toy Retailing Association, Business Alliance for Local Living Economies, Independent Running Retailers Association, Independent We Stand, Professional Association of Innkeepers International, Record Store Day and Soccer Dealer Association. All favor tax reform to level the playing field between Internet sellers and brick-and-mortar businesses.

The focus for March 4 is to allow independent business owners to make the case for fair taxation. It is grossly unfair, they argue, for retailers with physical stores to be forced to collect tax while their direct competitors do not. Their arguments are correct.

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