Conservative groups argue that it is unconstitutional to force e-retailers to tack on a sales tax when they have no physical presence in a state. They also say it will diminish tax competition among the states and will be difficult for online retailers to enforce, given that there are some 9,600 jurisdictions that collect a sales tax.
“It will present a great deal of compliance burdens that the existence of software cannot just magically erase,” argues Pete Sepp, executive vice president of the Washington-based National Taxpayers Union, which advocates lower taxes and limited government.
But conventional retailers, such as department stores and discounters such as Wal-Mart, as well as state governments looking for additional tax revenues, are urging the House to pass the legislation. They say it will “level the playing field” between themselves and Internet-only companies that have not charged sales tax in the past.
“This legislation is all about fairness,” says Michael Kercheval, president and chief executive officer of the International Council of Shopping Centers. “When lawmakers debate this bill, they usually start by saying, ‘I understand this is not fair and something needs to be done about it.’ ”