Fair Competition Legislation Gains Traction

Legislation that promotes fair competition between local and Main Street retailers and Internet-only sellers continues to gain traction in the House and Senate. The Marketplace Fairness Act of 2015 (S. 698) and the Remote Transactions Parity Act of 2015 (H.R. 2775) allow states to enforce their existing sales tax laws on remote sellers but the bills do not create new taxes or increase existing ones. 

“The businesses that line the streets of our nation’s small and rural towns provide essential goods and services to the farmers and ranchers who work the fields that surround them,” American Farm Bureau Federation President Bob Stallman said in a letter to House members urging them to support the legislation. “But hometown businesses are at a disadvantage when they compete with online-only retailers who don’t have to collect sales taxes.”

Under the bills, states must adopt sales tax collection simplification requirements to be able to collect sales tax on remote retailers. The bills make a small-seller exemption so that remote sellers with less than $1 million in annual sales do not have to collect sales taxes. In addition, remote sellers must be provided software for collecting the tax to ease the administrative burden.

When the sales tax disparity causes a Main Street business to close or scale back, the impact is especially hurtful to already struggling rural towns, Stallman noted, but it’s not only small business owners and the families they serve who are harmed.

“In addition to placing local merchants at a disadvantage, the disparity deprives state and local governments of the tax revenue they need to provide essential services,” Stallman wrote in the letter. “Since local governments and schools rely heavily on property taxes for funding, when sales tax revenues decline they often turn to property taxes to make up the difference. For land-based businesses like farming and ranching, this is particularly onerous.” -