Retailers pressure Congress to tax next ‘Cyber Monday’

A coalition of retail groups is pushing Congress to approve an online sales tax before the end of the year to ensure that this year’s “Cyber Monday” is the last one that goes untaxed.  

“This should be the last holiday shopping season that Main Street businesses have to compete on a playing field that is not level,” said Alison Joseph, a spokeswoman for the Alliance for Main Street Fairness, which is made up of brick-and-mortar retailers and other supporters of the bill.

{mosads}”Cyber Monday is just another opportunity for out-of-state, online-only retailers to exploit a government-sanctioned loophole that puts local businesses at a significant disadvantage over brick-and-mortar retailers,” she added.

Joseph urged Congress to pass legislation to “require all retailers, online and on Main Street, to play by the same set of rules.”

Cyber Monday is the marketing term for the Monday after Thanksgiving, when many online retailers offer steep discounts and promotions. The day is a counterpart to Black Friday, one of the biggest shopping days of the year.

Under current law, states can only collect sales taxes from retailers that have a physical presence in their state. People who order items online from another state are supposed to declare the purchases on their tax forms, but few do.

Consumers spent about $1.25 billion online on Cyber Monday last year, according to the digital analytics firm comScore. States were able to tax some of that, such as when the buyer and seller were in the same state, but much of it escaped taxes altogether.

The Marketplace Fairness Act, authored by Sens. Dick Durbin (D-Ill.), Mike Enzi (R-Wyo.) and Lamar Alexander (R-Tenn.), would empower states to collect taxes on online purchases. The bill exempts small businesses that earn less than $500,000 annually in out-of-state sales. 

In a hearing on the legislation in August, Durbin argued that the bill is not a new tax and only allows states to collect what is already owed to them.

“Small businesses in my home state of Illinois don’t want a handout from Washington,” he said. “They don’t want special treatment. All they want is a level playing field.”

Supporters of the legislation say the additional revenue could help states pay for vital services or cut other taxes.

A host of GOP governors, including Chris Christie of New Jersey, Mitch Daniels of Indiana and Rick Snyder of Michigan, have come out in support of the legislation.

The National Retail Federation, which represents large and small retailers, is also lobbying for the bill.

David French, the National Retail Federation’s top lobbyist, said the three Senate co-sponsors of the bill met with stakeholders this week to discuss a strategy for passing the legislation before the end of the year.

He said the bill could come up as a standalone item, or the supporters could offer it as an amendment to another bill. 

French said he is “fairly confident” that at least 60 senators support an online sales tax, enough to overcome a filibuster.

He admitted that there are “significant obstacles” to passing the Marketplace Fairness Act in the House, but he added that supporters “are working very hard to make sure the House is ready to pass it.”

French said he is hopeful Congress will approve the legislation before the end of the year, but acknowledged that the “stars would have to align in a number of different ways in order for it to get done in such a short timeframe.”

Sen. Jim DeMint (R-S.C.) is one of the leading opponents of the Marketplace Fairness Act. He included the bill in a report he released on Wednesday detailing dangerous legislation that could come up during the lame-duck session.

He called the bill a “federal decree disadvantaging Internet companies by forcing them to collect sales taxes not only according to their state and locality, but across all 50 states and thousands of local tax jurisdictions.”

Online auction site eBay is lobbying against the bill. Brian Bieron, the company’s top lobbyist, warned earlier this year that an online sales tax would “harm many thousands of entrepreneurial small business retailers who use the Internet to stimulate economic growth, serve consumers and create jobs across America.” 

Internet giant Amazon is one of the leading supporters of the legislation. The company argues that a single national framework for collecting online sales taxes is preferable to a patchwork of state laws.

Amazon reportedly has plans to dramatically expand its network of distribution centers to allow for same-day delivery, which would make the company subject to taxes in more states.

Tags Dick Durbin Lamar Alexander Mike Enzi
See all Hill.TV See all Video