Congress introduces remote sales tax bill
However, a policy research group known as the R Street Institute expressed its opposition to the bill, claiming the RTPA would dismantle proper limits on state tax-collection authority and could potentially cause serious damage to electronic and interstate commerce.
“Current law dictates that a state can only require a business to collect sales tax if it is physically present in that state,” said R Street executive director Andrew Moylan in a statement. “That precedent is the result of a Supreme Court decision grounded in a bedrock foundational principle of federalism: states must not be allowed to extend their tax and regulatory authorities beyond their borders.”
The group argued that the bill would create an imbalanced playing field between brick-and-mortar and online sales. Under the RTPA, only remote retailers would be required to ascertain their customers’ place of residence, look up the appropriate rules in nearly 10,000 taxing jurisdictions and then collect and remit sales tax for a distant authority with which they may have no tangible connection.
“Imposing this unworkable collection standard on remote retail sales only, and subjecting online retailers to as many as 46 state tax audits in the process, would not only be unfair but would result in enormous complexity and damage to interstate commerce,” Moylan said.
R Street is encouraging Congress to pursue a simpler approach based on “origin sourcing,” which would align remote sales tax collection rules with those governing brick-and-mortar sales.
Conservative groups such as Americans for Prosperity, Americans for Tax Reform and Heritage Action have joined R Street in opposing the bill. The coalition, which also includes the Competitive Enterprise Institute, FreedomWorks and the National Taxpayers Union among others, sent an open letter Tuesday to members of the House of Representatives outlining the many problems with the RTPA.
“Like the failed MFA, the new RTPA would dismantle proper limits on state tax-collection authority while potentially causing serious damage to electronic and interstate commerce,” the coalition wrote. “Furthermore, the bill would create a decidedly unlevel playing field between brick-and-mortar and online sales.”
