Arlington, Va. New legislation introduced in the House by Representative William Delahunt (D-MA) could provide an infusion of revenue for states struggling to balance their books without raising taxes, according to the Retail Industry Leaders Association (RILA).
The bill, the Main Street Fairness Act of 2010, will also address the nearly two decades of disparity between traditional "brick- and-mortar" retail stores and online-only retailers that in most cases are not required to collect sales taxes from their customers.
Rep. Delahunt's federal legislation plans to address this by giving Congress' consent to the simplified sales-tax collection system adopted currently by 23 states to ensure the fair and equitable collection of sales taxes across the board, RILA said.
"This legislation is an important step forward for both our economy and retail industry, which employs nearly 15 million workers across the country," said Joe Rinzel, VP for state government relations. "Leveling the playing field ensures that all Main Street businesses do not continue to face a significant competitive disadvantage by having to collect taxes on their sales, while Internet-only businesses escape that responsibility. This is an issue of fairness for both businesses and consumers."
Antiquated rules currently allow online retailers without a "physical presence" in a state to skirt the obligation of collecting state sales taxes. However, online transactions are still subject to each state's respective sales tax. This loophole puts the burden on the consumer to report the sales tax owed from an online transaction on their state income tax return--a confusing burden largely unknown or overlooked by most consumers come tax season, RILA said.