The time has come to modernize our nation’s outdated sales tax collection process. This legislation will promote states’ rights and bring sales tax parity to e-retailers and brick-and-mortar stores. The bill will be referred to the House Judiciary Committee because of its interstate commerce nexus.
Click here for the full bill text and here for a full list of supporters.
Frequently Asked Questions
Does this create a new tax?
No. It simply allows states to collect the use tax that is already due from consumers on purchases.
Why is this bill needed?
The Remote Transactions Parity Act (“RTPA”) will close a tax loophole that actually rewards companies for limiting growth and investment in new states. By placing online businesses on the same footing as brick-and-mortar stores, RTPA simply provides a mechanism by which states can collect a tax that is already legally required. This bill places all retail businesses on equal footing and ensures parity at the point of sale.
What does RTPA do?
RTPA levels the playing field by allowing states that meet simplification requirements to require remote sellers to collect taxes due on items purchased by consumers in those states.
Does RTPA create new, burdensome compliance costs on small businesses?
No. RTPA has significant protections and requirements that make the state provide and pay for virtually all of the compliance requirements - by not only footing the states with the bill for the software, but also forcing states to pay integration and maintenance costs so that businesses don't have to pay for the cost associated with making sure the software works within their existing checkout and shopping cart systems.
How does RTPA protect small businesses?
RTPA includes strict audit protections for small businesses, such as raising the small business audit exemption to $5 million and requiring states to pay for most of the compliance costs - all while letting the sellers choose the software that works best for their business, all at the cost of the state.
How is RTPA different than Marketplace Fairness Act?
RTPA includes several additions such as:
- Audit protection – sellers will not be audited by states where they do not have physical presence. Certified software providers will be audited.
- Statute of limitations – three years
- Small seller phase-in – small seller exception starts at $10 million and is phased out over three years
- Third party liability – allows remote sellers to avoid law suits for overcollection of sales taxes by enabling remote sellers to refund overpayment
- Free software – expands definition of free software to include installation
- Software certification – requires states to determine certification within 180 days of application and prohibits states from denying certification for arbitrary and capricious reasons
- Remote seller definition – incorporates language defining physical presence to clearly define what businesses qualify as a “remote seller”
What is the debate over “sourcing,” and what is RTPA’s sourcing requirement?
There is a debate over whether destination or origin sourcing should be used to enforce sales tax collection. Our current state tax structure is based on destination sourcing - meaning that a consumer pays the sales tax rate at either the point of sale or, in the case of remote sales, at the place where they consume it, which would be the address of where the item is delivered. Origin sourcing has been explored as a possible solution to the remote sales tax problem - it would instead only require the seller to charge the sales tax at the point where the business is located. While the origin sourcing approach would make collection simple for some sellers, it would actually raise the tax owed by the consumer if the seller was located in a higher taxing jurisdiction than that consumer. For this and other reasons, RTPA employs destination sourcing.
What is a certified software provider?
“Certified Software Provider” is the term used for the companies certified by states to provide and manage installation of tax collection software states are required to offer sellers under RTPA. Except in the case of intentional misrepresentation or fraud, states will conduct audits of remote sellers only through the CSPs. By forcing states to request audits through the CSPs, the RTPA creates another protective barrier between sellers and states requiring they collect and remit the sales and use taxes.
Comparison of Proposed Solutions to Sales Tax Collection Disparity
Conservatives Support E-Fairness; a collection of statements from conservative politicians, policy analysts and pundits in support of remote transactions parity.
Dear Colleague Letter
Amazon; June 15, 2015
American Supply Association; June 16, 2015
Arizona Municipal League; November 10, 2015
Associated Food Stores; June 8, 2015
Association of Washington Cities; July 15, 2015
Autozone; June 12, 2015
Best Buy; June 12, 2015
Bipartisan Policy Center (former governors); June 24, 2015
California Retailers Association; June 8, 2015
Colorado Retail Council; June 5, 2015
D Brothers Incorporated; June 8, 2015
Gap; June 12, 2015
Governor Herbert; June 23, 2015
International Economic Development Council; June 12, 2015
Illinois Retail Merchants Association; June 8, 2015
International Council of Shopping Centers; June 15, 2015
Marketplace Fairness Coalition; June 15, 2015
Michigan Municipal League; July 2, 2015
Mrs. G's; June 6, 2015
National Association of Real Estate Investment Trusts; June 8, 2015
National Association of Counties; June 15, 2015
National Association of Realtors; June 16, 2015
National League of Cities; June 22, 2015
National Retail Federation; June 15, 2015
National Sporting Goods Association; June 18, 2015
National Association of Wholesaler-Distributors; June 12, 2015
National Conference of State Legislatures; June 15, 2015
North Dakota Retail Assocation; June 5, 2015
Nevada League of Cities & Municipalities; July 7, 2015
Oklahoma Municipal League; July 15, 2015
Overstock; June 15, 2015
PeopleForBikes Business Network; September 17, 2015
Reams; June 8, 2015
Retail Industry Leaders Association; June 15, 2015
Sears; June 20, 2015
Sherman Enterprises; June 15, 2015
South Dakota Retailers; June 8, 2015
Streamlined Sales Tax Governing Board; June 15, 2015
Target; June 12, 2015
Tax Cloud; June 16, 2015
Tennessee Municipal League; July 6, 2015
The Kings English Bookshop; June 8, 2015
Utah Association of Counties; June 15, 2015
Utah Food Industry Association; June 8, 2015
Utah Retail Merchants Association; June 8, 2015
Utah Taxpayers Association; June 17, 2015
Virginia Retail Federation; June 8, 2015
Virginia Retail Merchants Association; June 12, 2015
West Virginia Retailers Association; June 8, 2015
Daily Herald: Op-Ed: Chaffetz should be applauded not criticized for his tax reform bill, June 22, 2016
Deseret News: My View: Internet sales tax a way for government to react to changing market, February 23, 2016
Salt Lake Tribune: Editorial - Utah politicians leading fight for sales tax fairness, January 14, 2016
Forbes: The GOP's Internal Battle of Online Sales Taxes, June 17, 2015
The Hill: Online Sales Tax Debate Reignited in the House, June 15, 2015
Morning Consult: Chaffetz has Voters in his Corner, not Goodlatte's, for Online Tax Bill, June 16, 2015
Fashion Times: Congress Introduces House Bill to Close Internet Sales Tax Loophole, June 16, 2015
Times Record: Proposed Bill Requires Online Retailers to Collect Sales Tax, June 16, 2015
Salt Lake Tribune: Editorial: Chaffetz Offers Best Internet Sales-Tax Solution Yet, June 24, 2015
Deseret News: In Our Opinion: Chaffetz's Internet Sales Tax Bill is a Good-faith Effort, July 6, 2015
Cache Valley Daily: First Wal-Mart, now Amazon: Utah Small Businesses Get Crushed, July 6, 2015
Ogden Standard Examiner: Our View: Time for Online Tax Parity, July 9, 2015