WASHINGTON, DC—The e-fairness Coalition calls for the passage of a more simplified and fair sales tax system. The current patchwork system of state taxation policies and regulations creates an unnecessary burden on commerce, including the key industries of real estate, retail and telecommunications.

On Thursday, December 6th 2007, the Judiciary Subcommittee on Commercial and Administrative Law held a hearing on H.R. 3396 The Sales Tax Fairness and Simplification Act. The e-fairness Coalition supports H.R. 3396, introduced by Congressman William Delahunt (D-MA) and calls for further action on the legislation in 2008.

H.R. 3396 grants federal authorization to the Streamlined Sales and Use Tax Agreement (SSUTA) that has been approved in 22 states. SSUTA provides for simpler sales tax provisions and provides businesses with a uniform database for collecting sales and use taxes.

The three main issues with current tax laws which create an un-level playing field are:

• Brick and Mortar retailers of all sizes are always required to collect on sales taxes while remote retailers are not required to collect sales tax on transactions.
• Businesses that operate nationwide must comply with nearly 7,500 taxing jurisdictions which create significant administrative costs that are then passed on to the consumer.
• Billions of dollars a year in uncollected sales tax revenue is being lost due to the remote tax gap creating State budget shortfalls.

The passage of H.R. 3396 would level the playing field:

• Decrease red tape, paperwork, overhead costs—no longer 7,500 taxing jurisdictions; no overlapping taxing jurisdictions.
• Exempt businesses with revenues less than $5 million—H.R. 3396 contains a small business exception that exempts small online entrepreneurs and catalog sellers with less than $5 Million in nationwide gross remote taxable sales from the out-of-state collection responsibility.
• Simplify collection process—uniform definitions of products and product based exemptions; uniform rules for sourcing; uniform procedures for certification of tax administration software; uniform rules for bad debts; uniform requirements for tax returns and remittances; consistent electronic filing and remittance methods.
• Encourage fairness for local merchants—stops internet retailers from undercutting local merchants in our communities by requiring all to collect sales and use taxes.
• Straight talk to consumers—consumers both online and in person will pay the same amount for taxes giving an equal playing field to both consumers and retailers.

Addressing state budget shortfalls provides H.R. 3396 with its most compelling reason to enact this key legislation. In 2008 state and local governments could lose as much as $33.6 billion in sales and use tax revenue from untaxed online and remote sales. H.R. 3396 would prevent revenue loss from occurring and help reverse projected State Government budget short falls. H.R. 3396 would prevent states and localities from resorting to raising taxes and instead implement a tax that should already be collected.

The e-fairness coalition believes the passage of H.R. 3396 is vital to the health of the new economy. The e-fairness coalition encourages further action on H.R. 3396 and its sister bill in the Senate S. 34. Both legislations should be passed and sent to the President in 2008.

The e-fairness Coalition includes brick-and-mortar and online retailers, retail corporations and associations, publicly and privately-owned shopping centers, outlet centers and independently owned shops.

Download: e-fairness_Coalition_Strongly_Supports_H.R. 3396.doc (Microsoft Word document: 48Kb)