The Internet empowers entrepreneurs to find consumers across the country and throughout the world, particularly empowering small and medium-sized businesses.

However, as local, state and the federal government look for ways to close budget gaps and raise revenue, some are seizing on the opportunity to target online sales.  Congress is now debating legislation that would require out-of-state retailers to collect sales and use taxes on purchases made to residents of their states — regardless of physical presence.

CCIA’s View:

CCIA has long opposed such legislation as burdening online vendors with the task of sorting through the policies of thousands of taxing authorities around the country, and serving as revenue collection agencies for each of them.  As innovation and entrepreneurship have always been the drivers of our economic growth, it is counterproductive to add to the administrative burdens of small businesses at the very moment we need them growing and leading our economic recovery.

There will be negative implications on the Internet if the relationship between taxes and physical presence is broken.  E-commerce has enabled businesses to broaden their scope beyond traditional geographical limitations.  Allowing states to impose geographically-based taxation collection requirements on e-commerce businesses would re-impose the very limitations that innovation has enabled them to overcome.  Indeed, since the broader the customer base, the more tax jurisdictions the business would have to collect for, so businesses would be in fact penalized for their success.  Good tax policy should promote and support new innovative business models rather than simply protect the old.

Most Recent Statements&Findings:

What’s So Fair About the Marketplace Fairness Act?

On February 14, another version of the Marketplace Fairness Act was introduced in the House and Senate. Like its previous incarnations in past Congresses, this bill would give states the authority to require out-of-state online retailers to collect sales and use taxes on purchases made to residents of their states — regardless of physical presence…

Read more

CCIA Opposes Marketplace Fairness Act

The Computer & Communications Industry Association continues to oppose legislation, such as the Marketplace Fairness Act introduced today, which would impose burdensome tax collecting requirements on online retailers — regardless of physical presence.  While we understand and share the desire for state and local governments to be adequately funded in these times, we believe this…

Read more

Online Sales Tax Collection and Physical Presence

Last year, CCIA consistently opposed efforts to pass legislation that would force online retailers to collect sales and use taxes regardless of physical presence.  Last month, we opposed an attempt in the lame duck session to attach such a bill to the defense authorization bill.  In light of such back door efforts, as well as…

Read more

CCIA Opposes Online Sales Tax Collection Amendment to Defense Authorization Bill

The FCC has approved the mandatory data request for the carrier wholesale and broadband for business markets.  This is a step towards addressing the market failure known as special access, which involves the rates American businesses pay the largest telecommunications carriers for broadband connections to the Internet.  For many years, the FCC has been discussing reforms to…

Read more

Online Tax Collection Mandate Won’t Produce Fairness

The Senate Committee on Commerce, Science and Transportation held a hearing on “Marketplace Fairness: Leveling the Playing Field for Small Business” this month.  Unfortunately, the substance of the hearing had very little to do with the laudable title, as it dealt with the Marketplace Fairness Act, which would shift the burden of tax collecting requirements to online retailers…

Read more