Two bills tackle online retail disparities

Two bills introduced this week aim to prevent tax disparities in online retail.

The Digital Goods and Services Tax Fairness Act, introduced by Reps. Rick Boucher (D-Va.) and Lamar Smith (R-Texas) on Wednesday, tries to ensure digital products and services are not taxed more heavily than products bought in stores.

"Unfair, multiple and inconsistent taxation of … digital goods and services will increase costs for U.S. businesses and make them less competitive in the global economy," Boucher said in a statement.

The bill would prevent state and local jurisdictions from imposing multiple or discriminatory taxes on the sale of, for instance, a music file downloaded off iTunes. The concern is that such products may be "taxed differently from their physical counterparts."

The bill also makes sure that "only the jurisdiction encompassing the customers’ tax address may impose taxes on digital goods and services, preventing the consumer from being taxed by multiple states."

Backers include the Recording Industry Association of America, Verizon, Apple and Time Warner.

Meanwhile, a bill introduced by Rep. Bill Delahunt (D-Mass.) on Thursday tries to guarantee that traditional retailers are not subject to a double standard. The bill would ensure that online retailers must meet the same sales tax requirements as their brick-and-mortar counterparts.

Online retailers without a physical presence in a state sometimes skirt state sales tax requirements, according to the Retail Industry Leaders Association. The Main Street Fairness Act of 2010 addresses the alleged disparity.

RILA said in a statement Thursday that the current law "puts the burden on the consumer to report the sales tax owed from an online transaction on their state income tax return — a confusing burden largely unknown or overlooked by most consumers come tax season."