Hearing on Marketplace Equity Act in the House

The House Judiciary Committee held a hearing this week on legislation (HR 3179) that would require retailers to collect and remit state and local sales and use taxes on remote sales.  The House bill is similar to legislation (S 1832) currently pending in the Senate.

The committee heard testimony in support of the legislation from representatives of the National Governors Association and the State Streamlined Sales Tax Project Governing Board, while a representative of small retailers such as eBay and a Vice President from the conservative Tax Foundation expressed concerns with the bill.  Local government organizations submitted testimony for the committee record that thanks the committee for addressing the measure while suggesting changes that would eliminate provisions that could result in the creation of single blended tax rates in states.

Committee members from both sides of the aisle expressed support for the legislation, and almost all believe that the measure does not impose new taxes, since it is a tax that consumers should be paying but in most cases do not.  There was some concern expressed that small business would be burdened by the legislation and suggestions were made to increase the threshold for an exemption from $1 million in annual sales.  However, other committee members argued that there should not be any exemptions for small businesses, as “brick and mortar” small business receive no similar exemption.

While there were no commitments during the hearing from House Judiciary Committee Chairman Lamar Smith (R-TX) to set a formal committee vote on the measure, momentum is clearly building.  The House would likely wait for the Senate to act on the measure, given the difficult process of securing approval for any bill in that evenly divided chamber right now.

Senate Majority Whip Richard Durbin (D-IL) and Senate bill sponsor recently indicated that the bill may have to wait until 2013 for a vote. However, Senate Commerce Committee Chairman Jay Rockefeller (D-WV), in an effort to keep the issue on the front-burner, scheduled a hearing on the Senate bill in his panel on August 1.

An archived video webcast, as well as testimony from the hearing this week can be found on the House Judiciary Committee website.


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