Cosponsors Needed to Level the Playing Field
Several weeks ago, Congressman Jason Chaffetz (R-Utah) introduced the Remote Transactions Parity Act (RTPA, HR 2775). If enacted, the RTPA will give states and local governments the flexibility to require remote online retailers to collect the sales taxes that are already owed on remote purchases. Closing this online sales tax loophole would not only level the playing field between online sellers and Main Street brick and mortar ones who are required to collect the tax, it would also mean resources for local governments to fund much needed local services like infrastructure and public safety. It is estimated that this loophole costs states and local governments $23 billion annually, which is why its passage is a top priority for NLC.
So far, a bipartisan group of 33 House members (R: 18, D: 15) are co-sponsoring the bill. More are needed to move the legislation this year. Election year politics in 2016 will make it only more difficult to pass the bill if Congress delays.
If you haven't already, please contact your House members and thank them for their support if they are already a co-sponsor, or urge them to cosponsor the bill if they have not. You can also view a current list of organizations who have endorsed the bill online.
The bill has been assigned to the House Judiciary Committee where it faces opposition from the Chair Rep. Bob Goodlatte (R-Va.). The Chairman is supporting a competing proposal that relies on origin sourcing which NLC believes is flawed and unworkable.
Our current state tax structure is based on destination sourcing - meaning that a consumer pays the sales tax rate at either the point of sale or, in the case of remote sales, at the place where they consume it, which would be the address of where the item is delivered. Origin sourcing has been explored as a possible solution to the remote sales tax problem - it would instead only require the seller to charge the sales tax at the point where the business is located. While the origin sourcing approach would make collection simple for some sellers, it would actually raise the tax owed by the consumer if the seller was located in a higher taxing jurisdiction than that consumer. This is a primary reason that RTPA employs destination sourcing, which NLC supports.
While NLC has for years called upon Congress to resolve this issue once and for all, House leadership has also recently signaled that they want this issue settled too. "I am telling [Chairman Goodlatte and Congressman Chaffetz] to work it out in committee. . . . Committees are where the expertise is. And they should have a bill come out of the committee," said House Majority Leader Kevin McCarthy (R-CA).
NLC could not agree more, and needs your help to ensure that it's RTPA that gets to the floor.