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:

House Holds Hearing On Online Sales Tax Legislation

The Computer & Communications Industry Association continues to oppose H.R. 3179, the Marketplace Equity Act, on which the House Judiciary Committee will be holding a hearing July 24.  The bill would allow states that have fulfilled certain simplification requirements to require out-of-state retailers to collect sales and use taxes on purchases made to residents of…

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CCIA Opposes Online Sales Tax Collection Amendment

Sen. Enzi, R-Wyo., Sen. Durbin, D-Ill., and Sen. Alexander, R-Tenn., offered their Marketplace Fairness Act yesterday as an amendment to the Small Business Jobs and Tax Relief Act.  The Computer & Communications Industry Association (CCIA) opposed the Marketplace Fairness Act when it was first introduced, and we remain opposed to it, as it would impose…

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Plan to Expand Tax Collection for Online Businesses Discussed in Senate Finance Hearing

The Senate Finance Committee held an April 25th hearing on “Tax Reform: What It Means for State and Local Tax and Fiscal Policy.”  Within the broader theme of the hearing, there was a lively exchange on the issue of online sales tax collection that illustrated supporters’ misperceptions regarding the compliance burden for small online retailers. Sen. Ben…

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Online Taxes On House Agenda

Online taxes has become a focus on Capitol Hill with various competing bills and last week the House Judiciary Committee held a hearing on “Constitutional Limitations on States’ Authority to Collect Sales Taxes in E-Commerce.” CCIA member eBay’s Vice President and Deputy General Counsel Tod Cohen was among those testifying before the Committee. The hearing discussed…

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