JA presses for sales tax fairness act

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JA presses for sales tax fairness act

March 13, 2009

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New York--In the hopes of leveling the playing field between Internet and brick-and-mortar retailers, Jewelers of America (JA) is urging Congress to reintroduce and pass the Sales Tax Fairness and Simplification Act.

The legislation would give states nationwide the power, which they currently do not have, to require that remote sellers, including Internet retailers, collect and remit sales and use taxes.

JA President and Chief Executive Officer Matthew Runci notified Congress of JA's stance in a letter sent to Republican Sen. Michael Enzi of Wyoming and Rep. William Delahunt, a Massachusetts Democrat, each of whom sponsored sales tax fairness bills in the last session of Congress.

"The new law would close an Internet sales tax loophole that is affecting our members severely," Runci wrote. "Countless sales have been lost when consumers gain information at a brick-and-mortar store, but then purchase their items on the Internet--because they are not required to remit sales tax."

According to JA, Internet and other remote sellers have had an advantage over brick-and-mortar stores for more than 15 years, ever since the Supreme Court in 1992 barred states from requiring that remote sellers collect sales taxes. At the time, the nation's highest court ruled that remote retailers conducting business nationwide would find collecting taxes for so many different jurisdictions too cumbersome.

But, JA contends that the situation is different today, thanks to the Streamlined Sales and Use Tax Agreement (SSUTA), which has been adopted by 22 states already. The agreement has simplified state sales-and-use tax rules, brought uniformity to the definitions of items in the sales tax base, reduced the paperwork burden on retailers and incorporated new technology to modernize administrative tax collection procedures. These changes enable remote retailers to use streamlined electronic systems to collect various taxes.

The hope for JA is that the act might have more momentum in 2009, as ailing state governments seek much-needed additional sales tax revenues. A University of Tennessee study has estimated that state and local governments lose more than $30 billion annually in uncollected sales taxes for remote sales.

JA has been working on the sales tax fairness issue for many years. The association is a member of a Sales Tax Fairness Coalition, which consists of businesses, shopping centers, associations and states, working to get the legislation enacted.

"Sales tax fairness legislation would eliminate an inequality in the tax code that for too many years has penalized consumers who wish to shop with Main Street retailers," wrote Runci in his letter to Enzi and Delahunt. "Particularly in the midst of a negative economic environment, being able to sell a product minus a sales tax provides a major advantage for the remote retailer. Jewelers and other business owners should no longer be burdened with this competitive disadvantage."

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