NEW: Senator Reed Introduces Online Sales Tax Bill to Help Local Businesses
Thursday, November 10, 2011
U.S. Senator Jack Reed (D-RI) is working to help small businesses compete. Today he and nine other senators introduced the bipartisan Marketplace Fairness act, which would require online and catalog retailers to follow the same rules as “Main Street” businesses and collect state sales taxes.
Because of a loophole, sellers with a physical location collect taxes on goods ordered and delivered, but those that don’t have a physical presence, known as remote retailers, do not have to collect taxes. Therefore it falls to the customer to report and pay the sales taxes they owe on online purchases to the state tax departments.
This bill gives states the ability to enforce their own sales and use tax laws and takes away the burden of consumers to report their owed sales taxes. It will help states and cities collect billions in unpaid taxes already owed, and reduce the need to raise taxes on businesses and citizens. This will increase annual state revenue and help save jobs.
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Governor Lincoln Chafee has estimated that because of the loophole regarding Internet sales, the state will lose $70 million in sales-tax revenue for fiscal year 2012. In his March 2011 address to the General Assembly, the he noted that this would provide the state “with enough revenue to allow us to repeal the 1% sales tax.”
The bill is cosponsored by 5 Democrats and 5 Republicans and has been endorsed by many different business and political groups, from AMAzon.com to the American Conservative Union.
