On December 6, Americans for Prosperity (AFP), Americans for Tax Reform, Heritage
Action For America, and FreedomWorks wrote to the members of Congress calling
on them to oppose any attempt to pass US internet sales tax legislation, such
as the Marketplace Fairness Act (MFA), before the end of this year.
Their letter pointed out that the issue of collecting internet sales taxes
"is contentious, and previous attempts to do so have raised important questions
that have yet to be resolved."
"With less than two weeks until lawmakers leave Washington, many of them
for good, the last thing taxpayers deserve is another lame-duck Congress where
unaccountable lawmakers headed into retirement carelessly pass legislation that
will have serious ramifications for small businesses and the American people
in 2017 and beyond," said AFP's Director of Federal Affairs and Strategic
Initiatives Chrissy Harbin.
"Internet sales tax proposals have several constitutional, economic and
logistical problems and we are concerned to see renewed discussion of these
proposals in Congress at a time like this," said AFP's Chief Government
Affairs Officer Brent Gardner. "Lawmakers should consider the consequences
of pushing through costly and complicated new tax policies, the burden of which
would fall onto small businesses and consumers in the form of higher prices."
Absent action by Congress to pass the MFA, the primary source of guidance on
an internet sales tax remains the 1992 pre-internet sales boom ruling by the
US Supreme Court in the "Quill" case. That case established the "physical
presence" test, where retailers are only required to collect sales tax
in states where they also have bricks-and-mortar stores.
Approved by the then Democrat-led Senate in May 2013, the MFA would give states
the option to require online retailers with national annual sales greater than
USD1m to collect the tax, even if their websites lacked a physical nexus in
the state. The bill has, however, encountered a great deal of opposition more
recently in the Republican-led Congress, particularly on the grounds that it
is considered to create new taxation and onerous compliance requirements.