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Online sales tax legislation introduced in the House

Published June 16, 2015
House version would exempt larger businesses than the Senate bill, at least at first.

WASHINGTON (BRAIN) — A bipartisan group of legislators in the U.S. House introduced a bill Monday that would create a system for states to collect sales tax from Internet sales by sellers outside their state.

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The House legislation, called the Remote Transactions Parity Act, is modeled on the Senate's Marketplace Fairness Act that was introduced in March. It differs in the size of businesses it makes exempt from having to deal with online sales taxes, but the exemption loophole is tightened over time in the House bill.

The bill authorizes states to enforce their own tax laws on sales made in their own jurisdictions and streamlines the process from state to state. The five states that currently do not collect sales tax would not be required to do so under the House bill.

Under RPTA, tax collection software would be provided by the state. The software must work in all qualified states, according to Rich Harper, a policy advisor to the Outdoor Industry Association.

The OIA supports the House legislation and has supported the Senate's version. The National Bicycle Dealers Association also supports the House legislation, NBDA executive director Fred Clements said. Clements said the association supports the bill but would prefer there was no exemption for small online businesses.

"There isn’t an exemption for bricks-and-mortar retailers so there shouldn’t be one for Internet retailers either. There is nothing about them that makes them deserve special treatment. In fact, the opposite is true. But, moving closer to fairness is better than what we have now," Clements said.

OIA's Harper said brick-and-mortar, specialty outdoor retailers are at a competitive disadvantage against remote sellers who do not always collect sales tax.

"Outdoor Industry Association supports the RTPA legislation because it will help level the playing field for all retailers in the industry, regardless of sales channel,"Harper said in an email to OIA members and others on Tuesday.

"The bill does not create any new taxes nor does it increase existing taxes, but authorizes states to enforce their own tax laws on sales made in their own jurisdictions and streamlines the process from state to state."

Harper said the House bill differs from the Senate because the House bill includes a small business exemption of $10 million in the first year, down to $5 million in the second year and finally $1 million in the third year.

The Senate bill exempts small businesses with $1 million or less in nationwide remote sales.

The House bill also provides for a more streamlined auditing process, allowing software providers to handle audits rather than each state, as outlined in the Senate bill.

The legislation was sponsored by Rep. Jason Chaffetz (R-UT). Co-sponsors include Reps Steve Womack (R-AR), John Conyers (D-MI), Jackie Spier (D-CA), Kristi Noem (R-SD), Steve Stivers (R-OH), Peter Welch (D-VT) and Suzan Delbene (D-WA).

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