This post on the National Retail Federation’s blog sums up the need for federal legislation nicely: “The discussion about broadening the base for sales taxes and lowering rates . . . will not happen until Congress passes legislation to close the Quill loophole.”
We were also struck by these sentences in the post, which deliver stark truths unflinchingly:
While conservatives and liberals fight over big picture issues like taxes and spending, real Main Street retailers are caught in the crossfire, and jobs are at stake.
Sales tax rates of 8 or 9 or 10 percent on a narrow base of taxable goods will inevitably drive consumers to search out lower tax alternatives. It is an absolute truth that where unfair tax policies treat similar entities differently, consumers will vote with their feet whether it’s across state lines or across sales channels.
The post comments on both a Wall Street Journal editorial and a letter to the editor about the editorial. The letter to the editor, written by Sandy Kennedy, president of the Retail Industry Leader’s Association (RILA), states that “as the American economy grows and evolves, it’s only prudent that we update our laws to reflect new realities” and makes it clear just how much those laws need updating:
The Journal is correct that the Supreme Court’s decision in Quill Corp. v. North Dakota [which stated that retailers must collect sales tax only for states where they have a physical presence] gives Amazon.com Inc. a loophole for evading sales tax collection. But that decision came in 1992, when no American without an MIT degree knew what the Internet was.
Kennedy also succinctly makes the case for leveling the playing field between online retailers and local retailers: “There is no reason government should be protecting a loophole that gives some companies a competitive advantage over others.”
We were also glad to see her point out that “readily available software has made sales tax collection across multiple jurisdictions remarkably simple.” We agree—that’s exactly what TaxCloud does.