By Peter Urban
Stephens Washington Bureau
WASHINGTON — Arkansas Rep. Steve Womack plans to introduce legislation on Wednesday that would have Amazon and other online retailers collect state sales taxes.
U.S. Rep. Steve Womack
The bill would benefit brick-and-mortar retailers like Bentonville-based Walmart that already collect state sales tax from online customers.
Womack, R-Rogers, is planning to hold a press conference Wednesday with Rep. Jackie Speier, D-Calif., to discuss their proposal. Several small business owners will join them for the Capitol Hill news event.
Under the bill, states would be empowered to collect sales taxes from major online retail companies. Womack and Speier would carve out an exemption for retailers with “small amounts” of online sales in a given state.
Sen. Dick Durbin, D-Ill., and Rep. John Conyers, D-Ill., introduce similar legislation in May but left the small business exemption to the states to determine, collectively.
“The introduction of bipartisan legislation ensuring a level playing field between online-only and brick-and-mortar retailers concerning sales tax collection is a positive development for all those committed to protecting jobs and small business,” said Danny Diaz, a spokesman for the Alliance for Main Street Fairness, which represents large and small retailers.
A coalition of online businesses and consumers said that Congress should establish the exemption but does not believe Womack and Speier go far enough, noting that a decade ago a $5 million exemption was sought.
“Ten years later, there are even more local tax jurisdictions with their own rates and rules, so cutting the small seller exemption to $1 million is moving in the wrong direction,” said Steve DelBianco, executive director of NetChoice.
A 1992 U.S. Supreme Court decision exempted retailers from collecting sales taxes in states where they have no physical presence. The Court, however, noted that Congress could enact legislation to require it.
Walmart, as well as smaller retailers, have lobbied for Congress to approve just such a bill. They claim that they are otherwise at a competitive disadvantage.
Most state governments, which lose billions a year in uncollected sales tax, also want online retailers to collect the tax.
The National Conference of State Legislatures estimated that states would lose $23.3 billion in 2012 because they cannot collect sales tax from online and catalog purchases. Arkansas would lose an estimated $113.9 million.
Amazon.com supports a nationwide system of state and local tax collection that simplifies compliance with an otherwise complex and burdensome system of thousands of distinct local and state regulations.
The National Governors Association has urged states to come together to simplify the collection process for online retailers. Last year, 44 states approved an interstate agreement to establish uniform sales tax rules. Arkansas and 23 other states have since enacted implementing legislation.
Arkansas has also passed legislation requiring Amazon.com and other online retailers with instate “affiliates” to collect the sales tax. Amazon.com responded by dropping the Arkansas “affiliates” that received compensation for steering sales through the online retailer.
In California, Amazon cut ties to some 25,000 affiliate businesses and spent more than $5 million on a potential ballot initiative to overturn that state’s law. Last week, the company agreed to drop the ballot referendum after the governor agreed to delay implementation of the sales tax rules for a year.
