Ever since the so-called “Amazon laws” shined the spotlight on ecommerce providers and online retailers, the subject of Internet sales tax fairness has taken center stage. On one hand there are the proponents of state and federal laws that would mandate the collection and remittance of taxes on virtually every online retail sales transaction.
On the other hand we find the opposing faction, pretty much formed by online retailers, that points to a landmark U.S. Supreme Court decision from 1992. On both sides of the debate we can find fairness being cited as the underlying factor.
Fairness in the Amazon Laws at the State and Federal Levels
In jurisdictions like California and New York, Amazon laws have been introduced in the respective state legislatures with varying degrees of success. In California, for example, Assembly Bill 155 was signed into law only to see certain provisions repealed. When New York enacted the first Amazon law in 2008, it started a flurry of aggressive litigation by major online retailers.
In mid-2011, the United States Congress began getting involved with the Internet sales tax saga in earnest. As a result of this involvement, there are currently three different bills in various stages of consideration in Washington that deal with this contentious matter.
There is House Resolution 2701, a bill in which the term “fairness” can be found on its heading. Senate Bill 1452 is nearly identical to HR 2701, and it was introduced around the same time. Those two bills are collectively referred to as the Main Street Fairness Act. A bill introduced in late 2011, the Marketplace Equity Act, is a bipartisan legislative proposal touting itself to be a compromise with the Main Street Fairness Act.
Fairness at the Corporate and Private Business Level
When Amazon CEO Jeff Bezos announced in 2011 that his company would begin collecting California state taxes in 2013, many online retail analysts wondered if the industry would get ahead of the state legislatures and Congress in creating an honor system for the collection, remittance and auditing of Internet sales taxes.
It could be argued that Jeff Bezos’ decision and the Streamlined Sales Tax Registration System (SST) are welcome initiatives by the private sector to settle the current status quo of legislative contention. The SST program is a voluntary process whereby online retailers that currently operate in multiple state jurisdictions can register to collect and remit sales taxes effectively. Herein lies a real fairness effort, and it makes good business sense.
With the current glut of legislative proposals floating in the different states and Congress, it is only a matter of time until all Internet retailers will be forced to collect and remit sales taxes on just about every transaction. The SST program aims to become part of the solution rather than the discussion. The SST program boils down to uniformity and cooperation between states to create effective platforms for managing Internet sales taxes.
To put the SST initiative into perspective, there are currently 24 signatory states representing 33% of online shoppers in the U.S. The SST program takes into consideration that brick-and-mortar retailers may be at a disadvantage since online shoppers can always make a decision to make their purchases online just to avoid sales taxes. Voluntary registration in the SST program shows that online retailers care about the industry and the jurisdictions they operate in, thereby bringing true fairness into the process.
Author Nicki Stevens writes for AccurateTax.com, an SST certified service provider of sales tax software and experts on e-commerce sales tax compliance.
CherrellT