Main Street Fairness Act
Proposed by Senator Richard Durbin (D-IL)
Senator Richard Durbin’s (D-IL) Main Street Fairness Act (MSFA) addresses what the states have been fighting for years; internet sellers not paying local taxes. Also known as the Amazon tax, MSFA would require businesses to collect taxes (that are already owed under current law) regardless whether the seller has a physical presence in the state.
When proposed in February, Durbin said in a speech in Illinois, "Why should out-of-state companies that sell their products online have an unfair advantage over Main Street bricks-and-mortar businesses?" continuing to add “Out-of-state companies that aren't paying their fair share of taxes are sticking Illinois residents and businesses with the tab."
Traditional brick and mortar stores want to level the playing field with internet retailers who are not subject to the same local taxes. In some cases, these are substantial advantages to the internet retailer (CA is over 8%) and leaves local businesses picking up tabs. Local governments, hoping to balance their budgets, see an opportunity for additional tax revenue.
WFCA is continuing to closely monitor progress of proposal and understand Senator Durbin has said he will introduce the bill soon as early as this week. Our sources close to the Senator say, although moving, it is slowly coming together. WFCA will alert members when there is movement on MSFA and advise on any actions we may need from our members
Link to press release on Senator Durban’s website:
State Action on eCommerce Taxation
Arkansas. In April 2011, Gov. Beebe signed a law imposing tax collection responsibilities on Internet retailers with Arkansas affiliates and more than $10,000 a year in sales from state residents. The law will go into effect in late summer.
California. June 29, 2011 Govenor Jerry Brown signed a legislation CA ABX1 28 for out-of-state retailers to collect and remit use tax on sales of tangible personal property to California residents to go into effect July 1, 2011. In June 2011, CA Assembly approved to collect sales taxes on online transactions and sent a bill to the state Senate. In 2009, state lawmakers passed sales tax legislation, but the bill was vetoed. Recently, in reaction to pending legislation over the taxation of Internet purchases, Amazon threatened to sever ties with 10,000 California affiliates.
See further coverage under: “Legislative Happenings in Key States.”
Colorado. In 2010, the state legislature passed a law requiring large online retailers either to collect sales tax or to provide the state with customer information. In response, Amazon closed its Colorado affiliates program. In January 2011, a federal judge effectively halted any income the state might receive from the law.
Connecticut. Legislation to impose Internet sales tax has been approved by the state’s legislative finance committee. The bill targets purchases shipped to Connecticut residents, if the online retailer has realized as little as $2,000 a year in sales from Connecticut-based referral sites. The bill now heads to the full state congress for debate, and possible passage.
Florida. In May 2011, Florida House of Representatives sent a $30 million corporate income tax cut for a tax break of $1,100 a year on average for 15,000 small businesses. The tax cut won bipartisan support and is a first step in a multi-year effort to cut the state’s annual $2 billion corporate tax.
Hawaii. In 2009, Amazon shut down its affiliates program as the state attempted to pass sales tax law. In March 2011, Hawaii lawmakers again introduced sales tax legislation, requiring online retailers with Hawaii affiliates either to collect sales tax or to provide the state with customer information.
Illinois. In March 2011, Gov. Quinn signed a law, called the Main Street Fairness Act, requiring any Internet retailer with Illinois affiliates to collect sales tax. The law applies to merchants with $10,000 in annual, statewide affiliate sales. Amazon closed its Illinois affiliates program.
Indiana. July 2011, Amazon announced that it plans to open a large distribution center with hundreds of jobs in Plainfield, Indiana.
Massachusetts. State lawmakers have introduced two bills imposing tax collection responsibilities on Internet retailers with state affiliates and more than $10,000 a year in sales from state residents.
Minnesota. In 2009, state lawmakers attempted to pass sales tax law for online retailers. In 2011, the governor recommended that affiliate nexus language be included in the proposed state budget. Lawmakers are considering online sales tax legislation.
Missouri. Two legislators have proposed joining the Streamlined Sales Tax Project to ensure that sales taxes are collected from online retailers. In addition, State lawmakers are considering replacing income tax with increased sales tax.
New Mexico. State lawmakers are considering a bill to establish affiliate nexus tax on online purchases.
Nevada. May 9, 2011 A coalition of hotel-casinos and small businesses is launching a $50,000 advertising campaign to build support for a change in tax laws so Amazon.com and dozens of other e-commerce companies would have to collect state sales taxes when they sell goods to Nevadans.
New York. In 2008, New York passed a law requiring online retailers to collect sales tax on shipments to residents. Amazon challenged its legality, claiming the law was “invalid, illegal, and unconstitutional.” In January 2009, the lawsuit was tossed out of court. In November 2010, a New York appeals court reinstated the lawsuit, ruling 5-0 that the “dismissal of the entire complaint was premature.” Amazon continues to collect sales tax in the state.
North Carolina. In 2009, Amazon closed its affiliate program after the state enacted Internet sales tax legislation. In 2010, North Carolina demanded information on purchases made by state residents between 2003 and 2010. Amazon disclosed its own in-state sales information, but not customer-identity information. North Carolina took Amazon to court and lost.
Oklahoma. In 2010, the state enacted a sales tax law, requiring retailers who do not collect sales tax to provide notices to customers that sales taxes are due.
Pennsylvania. In 2011, Alliance for Main Street Fairness Act announces it is launching a media campaign across PA to raise awareness.
Rhode Island. In 2009, Amazon closed its affiliate program after the state enacted sales tax legislation establishing an affiliate nexus.
South Carolina. In May 2011, SC House of Representatives reversed its April 2011 decision and voted for a tax break aimed at attracting Amazon distribution centers. In April 2011, state legislators rejected a sales tax break for Amazon, which would have exempted Amazon from collecting sales taxes for five years if it provided at least 1,249 full-time jobs. In response, Amazon abandoned plans for opening a new distribution center.
South Dakota. In March 2011, the state enacted a sales tax law, similar to Oklahoma’s law, requiring retailers who do not collect sales tax to provide notices to customers that sales taxes are due.
Tennessee. Amazon has begun to hire for two distribution centers, after the previous governor’s administration promised Amazon would not have to collect sales tax based on the facilities. Current Governor Haslam has said he will honor the commitment.
Texas. In June 2011, Texas governor vetoed a bill expanding the number of internet retailers required to collect sales taxes. In September 2010, Texas claimed Amazon owed $269 million in sales tax, after determining that a warehouse, owned by an Amazon subsidiary, established a physical presence in the state. In response, Amazon said it would close the facility and canceled plans to build another warehouse in the state. The Texas House has passed a bill to expand the definition of physical presence. The SEC is now looking into the dispute.
Vermont. In March 2011, the Vermont House passed a bill imposing tax collection responsibilities on Internet retailers with state affiliates and more than $10,000 a year in sales from state residents. The bill now moves to the Senate.
For information on the legislative and regulatory issues WFCA is tracking go to: http://wfca-pro.org/Legislative-Action.aspx.
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