JA supports legislation aimed at taxing remote business transactions

Jewelers of America “strongly supports” a bill being considered in the U.S. Congress that would require mail-order, telephone, and Internet merchants to collect sales tax on transactions conducted with out-of-state purchasers.

“For years, out-of-state retailers have had an unfair advantage by not being required to collect sales tax that their customers owe,” says Matthew Runci, JA president and CEO. “This legislation is designed to make sales tax collection simple and fair, and it will level the playing field. It will benefit all retailers, including our 10,000 member stores.”

H.R. 3184, “the Simplified Sales and Use Tax Act of 2003,” and a companion bill in the U.S. Senate would let states that have implemented the Streamlined Sales and Use Tax Agreement ask non-state retailers to collect sales tax when selling to their residents.

The streamlined sales tax agreement was in response to a U.S. Supreme Court ruling that exempted remote sellers from collecting sales tax revenue from out-of-state customers. This was under the rationale that states’ sales tax laws were too complex to know how much to charge customers.

The legislation includes a clause that asks states to provide “reasonable and uniform compensation” to retailers for collecting the sales tax. It also sets other standards for administration and court administration. Retailers with less than $5 million of remote sales are exempt.

The legislation was introduced in the House Sept. 25 by Reps. William Delahunt, D-Mass., and Ernest Istook, R-Okla. The companion bill in the Senate was recently introduced by Sens. Byron Dorgan, D-N.D., and Michael Enzi, R-Wyo.

JA joins the National Retail Federation in endorsing and urging quick passage of the legislation.

“Remote sellers have claimed for years that the states’ sales tax systems were too complicated for a retailer in one state to know what sales tax to charge a customer from another state,” said Maureen Riehl, vice president and state and government relations counsel at the NRF. “That’s no longer true. The states have been busy simplifying their sales tax systems, and there’s no longer any excuse for not collecting the sales tax customers owe. The simplification process has given retailers the clarity, and certainly they need to know they’re charging the correct amount of tax.”