This is an archived article that was published on sltrib.com in 2011, and information in the article may be outdated. It is provided only for personal research purposes and may not be reprinted.
Pending federal legislation that would require web retailers to collect sales tax is gathering bipartisan support along with the backing of both Internet retail giant Amazon.com and Salt Lake City's homegrown King's English Bookseller.
Two similar bills are currently under discussion in the U.S. Congress:
• The Main Street Fairness Act, sponsored by U.S. Senators Dick Durbin, D-Ill.; Michael Enzi, R-Wyo.; and Sen. Lamar Alexander, R-Tenn.
• The Marketplace Fairness Act, sponsored by U.S. Reps. Steve Womack, R-Ariz., and Jackie Speier, D-Calif.
Whether the controversial measures can gather enough traction to pass remains to be seen.
"To me this is absolutely nonpartisan, and it is purely an issue of equity," said Betsy Burton, who owns the King's English Bookstore and also co-chairs Local First Utah, a nonprofit organization aimed at bolstering independently-owned businesses throughout the state.
"There is no reason why government either state or federal should be in the business of deciding whether one segment of retailers gets an advantage over another segment," Burton said, arguing that online sales industry is no longer young and tender, but has become a behemoth.
Speaking of huge and powerful entities, Amazon.com sides with Burton. In a Nov. 9 letter to Sens. Durbin, Enzi and Alexander, Paul Misener, the company's vice-president, threw Amazon's heft behind the measure.
"Amazon strongly supports enactment of your bill and will work with you, your colleagues in Congress, retailers, and the states to get this bipartisan legislation passed," Misener wrote.
By allowing states to require out-of-state retailers to collect online sales tax at the time of purchase, the Main Street Fairness bill would provide additional revenues to state and local governments without a tax increase and would also streamline its collection, Misener argued.
The way things currently work, brick-and-mortar businesses face a 10-percent revenue disadvantage, Burton said, because customers may drop by to peruse products but purchase online to avoid sales tax.
Customers who buy online from companies that have an in-state retail presence are supposed to remit the appropriate sales tax at the time they file their state tax returns. However, that rule goes largely unenforced.
However, an estimated $180 million in uncollected state and local tax revenues is at stake, said Dave Davis, president of the Utah Retailer Merchants Association and Utah Food Industry Association.
Combined, both organizations total about 530 member businesses. However some of those businesses such as Best Buy, Home Depot, JC Penney and Smiths Food and Drug represent several in-state units.
"To a large extent, it feels like we're herding cats" except on this issue, Davis noted.
"Not a single member is in opposition to this," Davis said. "That just doesn't happen very often. It's a fairness issue."
While sales and use tax rates vary from one municipality to the next, retailers have argued that collecting the appropriate levy is overly complex. However, with new software advances, Amazon recently volunteered to collect that tax for companies, Davis added, and charge them a 2.9 percent transaction fee for providing the service.
"God bless Amazon for seeing a market opportunity and seizing on it," Davis said.
Where Utah's congressional delegation stands on the issue is still unknown.
Rep. Jason Chaffetz, R-Utah, said his staff is studying the two bills but the issue has not yet risen to "tier one" priority.
"The discussion is still very fluid and we want to be cautious in staking out a position," Chaffetz said Monday.
"The core question," Chaffetz added, "is, Should the states have the ability to collect these taxes? We're trying to figure out what the unintended consequences might be."
How the two bills stack up:
Marketplace Equity Act (Speier & Womack)
Exempts small sellers with gross annual receipts under $1 million in the U.S. or $100,000 in total remote sales into any one state from sales taxes
Rate for remote sellers cannot exceed that of brick-and-mortar businesses
Marketplace Fairness Act (Alexander, Durbin and Enzi)
Exempts small sellers with gross annual receipts under $500,000 in the U.S. from sales taxes
States must provide adequate software, also would hold remote sellers harmless for errors or omissions due to the software
Source: Stand With MainStreet