Congressman Jason Chaffetz (R) – Main Street Fairness Act
Where do you stand on the “Main Street Fairness Act” and/or the “Marketplace Fairness Act,” what are your concerns about the bills, and do you expect any movement on these bills in 2012?
HR 3179, the Marketplace Equity Act, is currently before the House Judiciary Committee of which I am a member. I have discussed this issue with various stakeholders including businesses that conduct most or all of their sales online, businesses that are primarily brick and mortar, state legislators, and local government officials.
Currently, HR 3179 would allow states that meet the bill’s requirements to require collection and remittance of sales taxes from remote sellers with more than $1 million in annual sales. Remote sellers would be required to collect and remit sales taxes only in those states in which they had more than $100,000 in annual sales.
I intend to introduce an amendment to HR 3179 when the bill is marked up in committee that increases these thresholds and adds a third threshold that is based on total sales amounts, not just remote sales amounts. If my amendment is adopted, these higher thresholds would be reduced over a three year period.
Higher thresholds are needed to protect very small businesses. A business with $1 million in sales typically has just a couple of employees and probably does not have a full-time accountant. While many proponents of the legislation argue that compliance with the new law would be easy even for small retailers, I am not convinced, and no one will know for certain until the law is implemented. I am particularly concerned about compliance costs when the law is first implemented. After a couple of years, compliance costs will undoubtedly decrease which justifies higher initial thresholds that are reduced within a couple of years after implementation.
In addition to the higher thresholds, my proposal would add a third threshold: total sales amounts, not just remote sales amounts. A company with $1 billion in total sales of which $10 million is remote could more easily comply with the new requirements than a company with $10 million in total sales if 100% of that were remote. Obviously, the company with $1 billion in sales would have a much larger accounting staff that would more easily absorb the new compliance costs.
I have been discussing the threshold amounts with various groups. While I have not yet determined what these amounts should be, I am confident we can find agreement on a suitable level that protects small businesses.