California and other states could move ahead with making online retailers such as Amazon collect and remit sales taxes even if the companies don't have physical presences in those states, under a new bipartisan bill co-authored by a Bay Area House member.
The Marketplace Equity Act, introduced Wednesday by Rep. Steve Womack, R-Ark., and Rep. Jackie Speier, D-Hillsborough, would establish a framework for laws such as the online sales tax measure California adopted in June, but later agreed to delay using until next year.
"This will leave it to the states, to states' rights, but we also want this to be an education because what people don't know is that -- regardless of whether you buy online or in a brick-and-mortar store -- you're supposed to pay sales tax," Speier said.
Leaving it to taxpayers to declare and pay those personal use taxes on their income tax returns hasn't worked, she said, and California now loses $1.7 billion in annual revenue that could be paying for schools, emergency responders and other public needs.
California is among several states that have enacted laws trying to force online retailers to collect sales taxes, despite a 1992 U.S. Supreme Court ruling that said vendors can't be required to collect the taxes if they do not have a physical presence in the state.
That's a nut only Congress can crack, Amazon and other companies have contended, and California's law and its massive market share have led to a burst
In July, U.S. Sen. Dick Durbin, D-Ill., introduced a Main Street Fairness Act with support from trade organizations such as the National Retail Federation and the Retail Industry Leaders Association; both groups voiced support for the Womack-Speier bill, as well.
But Speier said her bill is "dramatically different" from Durbin's in that his creates a national sales tax covering all states, while hers authorizes states to collect their own.
Paul Misener, Amazon's vice president of global public policy, issued a statement agreeing that the sales tax issue must be resolved in Congress, and that a federal law will let states address their budget shortfalls.
"We support enactment of federal legislation, and expect several bills to be introduced; we're reviewing this one now," he said.
The Computer & Communications Industry Association opposes this bill, as it did Durbin's.
"Saddling online companies with tax collection duties may be a convenient way for state governments to get at revenue, but penalizing businesses for utilizing technology and innovation would be a shortsighted targeting of new revenue models, while protecting existing business models at the expense of consumers and growth," association President and CEO Ed Black said in a statement.
Womack and Speier noted that their bill includes a small-business exception.
So long as a business doesn't have more than $100,000 in annual sales in an individual state per year, or $1 million in sales nationally, it will be exempt from having to collect and remit sales tax in that state.
California law long has required residents to pay a personal use tax to the state when buying items online from companies based elsewhere, but they rarely do.
Gov. Jerry Brown signed a bill into law in June that required the companies to collect those taxes and send them to the state instead.
But Amazon threatened a costly ballot initiative campaign to repeal the law, so lawmakers and Brown enacted another bill last month delaying enforcement of the tax collections until September 2012.