Congress Urged To Close Online Sales Tax Loophole
Nick Pyle
State officials and mall retailers urged Congress on Wednesday to
finally close a loophole that they say benefits some online retailers
by allowing them to avoid collecting sales taxes from out-of-state
customers.
The Judiciary Committee examined whether lawmakers should close the
loophole opened by the 1992 Supreme Court decision in Quill vs. North
Dakota that found catalog and other retailers do not have to collect
sales taxes from customers in states where they do not have a physical
store or other facility.
“It is estimated that currently in the state of Texas between $600
million and $800 million is not collected on out-of-state sales. …
That points out to me the unfair competition that my storefronts are
competing against,” state Rep. John Otto, R-Texas, told the panel. He
said the number will grow as more retail sales migrate to the
Internet.
Despite arguments from critics about the burdens that proposed
legislation would impose on small businesses, even some tax-averse
lawmakers such as Rep. Mike Pence, R-Ind., said they believe
congressional action is warranted. “I don’t think Congress should be
in the business of picking winners and losers. Inaction by Congress
today results in a system today that does pick winners and losers,”
Pence said.