NAHFA Supports Remote Transactions Act

June 18, 2015  by in Furniture Retailing, Industry   

The bill, proposed by Rep. Jason Chaffetz (R-Utah), would require online retailers to collect and remit sales tax on all purchases just as brick and mortar retailers are required to do.

In 2013 the U.S. Senate passed the Marketplace Fairness Act, which would require online/remote retailers to collect sales taxes on online purchases. The act lingered in the House and nothing got done.

NAHFA and a host of other industry associations led calls to action to encourage members to get their Congressmen on board and support it. This year, the original co-sponsors reintroduced the bill in the Senate. Republican Senate Majority Leader Mitch McConnell is not a supporter nor is his counterpart in the House, Speaker John Boehner. Some members view the MFA as creating a new tax.

However, consumers are supposed to, by law, report and remit tax on online purchases. Consumers can be audited and charged with penalties for failing to pay sales and use taxes, but too often states are unable to enforce the requirement.

According to a report from the National Retail Federation, about $25 billion in tax revenue is uncollected.

There are now two approaches to online sales tax proposals floating around in the House. One is offered by House Judiciary Committee Chairman Bob Goodlatte that proposes the sales tax be collected based on the origin-of sale, not the customer’s rate. Goodlatte’s proposal has not received support from the traditional MFA coalition groups. A second approach is offered by Oversight Committee Chairman Chaffetz, and it is more widely accepted by other retail industry associations.

Chaffetz’ approach calls for the following

• Sales tax would be collected based on the buyer’s location.

• Retailers would only be subjected to one potential audit from one state and the audit would be focused on the software provider, not the retailer.

• There are some concerns with exemptions for small sellers—the proposal includes a three-year phase in period; exemption under $10 million in the first year, under $5 million in the second year, and under $1 million in the following years. Retailers who sell via catalog are also exempt (with the stipulation that they only sell via catalog, no website, no store front, etc.).

NAHFA is encouraging retailers to contact their member of Congress and let them know why they should co-sponsor Rep. Chaffetz’ proposal:

• An online sales tax removes the price advantage Internet sellers have over brick-and-mortar stores and provides for fair competition.

• Collectively, states are losing $25 billion in uncollected sales taxes—which led to raising other state/local taxes.

• Leveling the playing field helps local businesses thrive.

Congressmen should contact Amber Kirby Talley, Rep. Chaffetz’ legislative director, at 202-225-7751 or via e-mail to Amber Talley and let her know they will co-sponsor his proposal.