Earlier this month, our True Simplification of Taxation (TruST) coalition spoke with representatives from many of the 20 companies that have helped finance TruST to date. In addition to briefing them on activity in the 114th Congress affecting remote/internet sales tax, we laid out what’s needed to either defeat the Marketplace Fairness Act (MFA) (and a similar bill being circulated by Rep. Jason Chaffetz), help gain support for Rep. Bob Goodlatte’s more appealing alternative approach or find some other resolution to this issue in the best interest of ACMA members.
While we appreciate those who have responded to our prior calls for financial help, TruST remains thinly capitalized with operating funds projected to last only until the early Fall - with nothing in reserve to more aggressively respond to very possible surging threats. We need more companies to get off the sidelines. Please contribute something to let us know we have your support.
If the wrong side gets its way, you can look forward to hundreds of thousands in additional expenses annually in compliance costs, plus several percentages off your top line due to customer confusion.
Following the pledge made to me and NetChoice Executive Director Steve DelBianco at a National Conference of State Legislatures (NCSL) event earlier this year, states are making good on their threat to pass a variety of nuisance legislation, hoping the pain and disruption it causes will increase pressure on Congress to act. The DMA continues to do an admirable job of running down these state-level threats as they occur. If you become aware of new state-level initiatives, please report them to us and likewise please be responsive if we come to you looking for action in your home state.
As you are considering what you can do to help in this effort, below is a rundown on what’s going on with this potentially dangerous matter so far this year. Please note that ACMA’s preferred position on this entire matter all along has been to leave the 1992 Quill v. North Dakota precedent intact. Over the past three years, however, momentum to change the law has built to the point where we concluded it’s in the industry’s best interests to find an acceptable alternative to the status quo. Otherwise, catalogers and e-commerce companies may face a much worse outcome.
Recall that big box retailers and their allies (now including Amazon, which undoubtedly sees this as a boon to its marketplace model) have been pushing for years to overturn Quill and force massive compliance burdens on your business. This need not be the outcome! Here are the major developments of late:
February:
House Judiciary Committee Chairman Bob Goodlatte (R-Va.-6th) began circulating a draft bill called the Online Sales and Simplification Act (OSSA).
Whereas MFA and other MFA-like bills call for remote sellers to collect from some 10,000 different taxing jurisdictions, OSSA calls for the reverse, a considerably simpler approach that would also avoid leaving catalogers susceptible to multiple out of state audits.
TruST, has taken a strong stand in support of OSSA as it is the best alternative offered to date and needs some public support if it is going to be considered seriously.
What exactly is OSSA? Basically, the cataloger applies the rules and rates from the jurisdiction it collects in now as a home location to all transactions made. You send a clearinghouse the out of state dollars you collect with a breakdown by zip code of where the collections originated. While state legislators have expressed concern that businesses will rush to low- or no-tax states in response, information we have received suggests this unlikely in most cases.
Big Box Backlash: Despite this creating a level playing field, big box retailers reportedly still favor MFA-type approaches that create huge complexities for catalog/remote sellers, possibly precisely for this very reason.
March:
Sen. Michael Enzi (R-WY) reintroduced MFA, mostly untouched from the bill that passed the Senate in 2013, but hit a dead end in the House. While it is less likely to pass the Senate as easily as last time, it would still likely pass if a vote were held today. Fortunately, it won’t hold any greater appeal in the House than it did in the 113th Congress.
March-June:
Rep. Chaffetz (R-UT-3rd) began circulating a bill many consider to be “MFA Lite.” Called the Remote Transactions Parity Act (RTPA), it was expected to fix many of the major problems of MFA.
Introduced on June 15th, Chaffetz’ draft bill does little to correct the most glaring issues for remote marketers. RTPA does not protect small businesses using electronic marketplaces, has a small seller exemption that is ineffective and phased out quickly, and excludes important dispute resolution and preemption provisions that were in Chaffetz’s earlier version.
June:
The Permanent Internet Tax Freedom Act (PITFA) was passed out of the House on voice vote and now heads to the Senate. The widely supported PITFA would permanently ban states from taxing Internet access or placing multiple or discriminatory taxes on e-commerce.
Potential danger: It is rumored that some in the Senate may seek to attach MFA to this popular bill or to attach MFA to BATSA, the Business Activity Tax Simplification Act, which is another popular bill gaining momentum.
Help Us Save Your Business Over the past three years, TruST, a coalition comprising four relatively small organizations – the ACMA, DMA, NetChoice, and Electronic Retailing Association - has successfully executed a ‘David’ against a very dangerous ‘Goliath’ MFA. The Goliath is being bankrolled by big-box retail chains. Click here to go to TruST's home page and scroll to the bottom to see recent press we've generated about the assorted bills. Thanks to the generosity of some 20-plus donor companies, TruST has had the funding to be reasonably successful to date.
But this battle is heating up more than ever. If MFA or RTPA is passed, this will be a game-changer for many catalog businesses. We need more companies like the 20-plus to step up now. We’ll gladly accept donations from $500 to $25,000. All money received for this effort will fund this fight; none are covering any association overheads.
Without additional funding, we cannot continue to contract with the terrific resources we’ve used to win this battle to date. We also may need to step up our P.R. and G.R. (government relations) campaigns as this heats up this summer. If you have yet to contribute, please do so by simply clicking here for ACMA’s Tax Action Fund. Then call others in the catalog/e-commerce industry and ask them to step up too.
If You Do Nothing Else...
Even if you can’t make a donation, we still need your involvement – and it’s quite easy. Please follow these simple steps:
Click here to read TruST’s Comparison of Proposed Solutions to Sales Tax Collection Disparity. There, chances are highly likely you’ll see that Rep. Goodlatte’s draft bill is your best bet here.
Next, click here and let us know you’ll be willing to sign you and your company’s name to the letter. In your email, please include a jpg of your company logo. If you produce more than one catalog title, please indicate so and send all your brands’ logos.
Contact your representatives and convince them of the significant harm MFA or RTPA passage could have on the district and its employment.
Thank you for taking action at this vital time in your company’s history. Your support will give us the means to continue this fight on your behalf. Please contribute now and allow us to take the debate in to a direction that resolves this reasonably and efficiently.
### About ACMA ACMA is a Washington-based not-for-profit organization specifically created to advocate for the unique collective interests of catalog mailers in regulatory, public and administrative matters where the shared impact transcends individual company interests. The only catalog owned and controlled trade group focused solely on the business interests of catalogers and their supply chain, ACMA participates in rule-making and other proceedings of significance where a single collective voice increases influence and effectiveness. Membership is open to any party with direct interests in the catalog industry. More information can be found at www.catalogmailers.org.
About TruST TruST, or the True Simplification of Taxation is a Washington-based coaltion put together by ACMA, DMA, ERA and NetChoice to advocate for common-sense solutions to the remote sales tax question.
