ZSA Special Report – MFA – 7 Principles on Remote Sales Tax

From the Desk of Michael Zaldivar, CPA, CMI ~

On September 18, 2013, House Judiciary Committee Chairman, Representative Bob Goodlatte (R-VA), set forth 7 basic principles intended to “guide discussion on this issue and spark creative solutions”.  As the Marketplace Fairness Act progresses through the legislative process in the House of Representatives these principles will solicit suggestions and solutions to the taxing multistate problem of taxing e-commerce.  Chairman Goodlatte and Subcommittee Chairman Spencer Bachus (R-Ala) released the following statements in addition to the 7 principles noted below:

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Chairman Goodlatte: “Americans across the country are affected by the issue of Internet sales tax whether they are consumers or business owners. The aim of the principles is to provide a starting point for discussion in the House of Representatives. I greatly look forward to hearing fresh approaches to this issue and continuing the discussion.”

Subcommittee Chairman Bachus: “The principles issued by Chairman Goodlatte provide a thoughtful framework for discussion on the Internet sales tax issue. As chair of the subcommittee with jurisdiction over Internet tax issues, I appreciate that the Chairman is giving it serious consideration.”

Basic Principles on Remote Sales Tax

1. Tax Relief – Using the Internet should not create new or discriminatory taxes not faced in the offline world. Nor should any fresh precedent be created for other areas of interstate taxation by States.

2. Tech Neutrality – Brick & Mortar, Exclusively Online, and Brick & Click businesses should all be on equal footing. The sales tax compliance burden on online Internet sellers should not be less, but neither should it be greater than that on similarly situated offline businesses.

3. No Regulation Without Representation – Those who would bear state taxation, regulation and compliance burdens should have direct recourse to protest unfair, unwise or discriminatory rates and enforcement.

4. Simplicity – Governments should not stifle businesses by shifting onerous compliance requirements onto them; laws should be so simple and compliance so inexpensive and reliable as to render a small business exemption unnecessary.

5. Tax Competition – Governments should be encouraged to compete with one another to keep tax rates low and American businesses should not be disadvantaged vis-a-vis their foreign competitors.

6. States’ Rights – States should be sovereign within their physical boundaries. In addition, the federal government should not mandate that States impose any sales tax compliance burdens.

7. Privacy Rights – Sensitive customer data must be protected.

For Further Information

Principles on Internet Sales Tax

Bob Goodlatte (R-VA)

Spencer Bachus (R-Ala.)