Marketplace Fairness Act Of 2013

Floor Speech

BREAK IN TRANSCRIPT

Ms. COLLINS. Mr. President, I rise to speak on the Marketplace Fairness Act. I applaud Senator Enzi for his many years of work on this legislation, of which I am a cosponsor. This bill rectifies a fundamental unfairness in our current system. Right now, out-of-State Internet sellers, so-called remote sellers, have an advantage over Main Street businesses. Main Street businesses have to collect sales taxes on every transaction. Because remote sellers don't have to charge this tax, they enjoy a price advantage over the mom-and-pop businesses that form the backbone of our communities. This bill would allow States to collect sales taxes on remote sales, thereby leveling the playing field with Main Street businesses.

It is important to recognize that this bill does not authorize any new or higher tax, nor does it impose an Internet tax. It simply helps ensure that taxes already owed are paid.

I would like to engage Senator Enzi in a colloquy regarding the manner in which the bill is to be implemented. As introduced, the bill would require some businesses to start collecting sales taxes in as little as 90 days. I hope that my colleague from Wyoming would agree that is too short a time period, and I appreciate the fact that he has offered an amendment that includes a 6-month delay. I believe, however, that a delay of at least 1 year is needed to allow businesses time to implement the new systems and software necessary for compliance. I do appreciate that the Senator from Wyoming exempted small businesses with sales under $1 million, as I had urged.

Nevertheless, from a covered seller's perspective, complying with the Marketplace Fairness Act requires more than just installing new software. Multichannel retailers--those who sell online, through catalogs, over the phones, and in stores--have their own unique order processing systems. Tax collection software must be programmed to link to each component of their order processing systems. This step alone could involve considerable programming time for each online retailer.

Each retailer's tax department, or outside consultants, will be required to research and develop a comprehensive understanding of the unique sales and use tax policies in every State where their online customers reside to make sure the programming for their tax collection software is correct. That involves answering a number of questions for each State.

The differing treatment of athletic apparel provides a great example of the complexity involved. In some States, clothing and athletic footwear are exempt from tax. In others, they are exempt only up to a certain price level. Yet other States make a distinction between clothing and footwear used for athletic purposes--which they tax--and clothing and footwear used for general purposes--which they do not tax. In those States, systems must be programmed to correctly treat articles that can be viewed as either athletic apparel or general clothing, depending on the user. Board shorts, sneakers, and windbreakers are just a few examples of common items that give rise to substantial complexity.

Retailers will need to invest additional hours in tax analyst and programmer time to ensure their systems are able to address these issues seamlessly. Even with a 1-year delay, retailers will have to begin early, and move quickly, to implement the Marketplace Fairness Act.\

BREAK IN TRANSCRIPT

Ms. COLLINS. I would also like to note that the collection of sales taxes online will be new not only for many retailers, but also for consumers who are used to the current system. It is important to implement the new law correctly, from the outset, for these retailers and their customers.

In this regard, I believe that it is also important to make sure that the implementation of the new law does not disrupt the busy holiday season. For this reason, I believe that States should be prohibited from exercising their new authority under the Marketplace Fairness Act during the last quarter of the first year after enactment.

BREAK IN TRANSCRIPT

Source