Legislative Update: CCIM's Position on Internet Sales Tax

Internet sales tax was a leading legislative topic in the second half of 2011. On the federal level, several pieces of legislation have been introduced as a way to enforce the collection of these remote sales taxes. The following timeline provides an overview of legislative action over the past several months. 

• July 2011 — Main Street Fairness Act Introduced in House (H.R.2701) and Senate (S.1452)
  U.S. Senator Dick Durbin (IL) proposed Senate Bill 1452 and Representative John Conyers proposed the same bill in the House (H.R. 2701), which was developed to grant the consent of Congress to the Streamline Sales and Use Tax Agreement (Agreement). The Agreement was created to encourage states to sign on to the Agreement and thus collect sales tax from out-of-state customers regardless of whether or not they have an actual physical presence in that state. This would require all "remote sellers" (Internet, catalog merchants, and toll-free offers) to collect sales taxes, if the state has signed onto the Agreement. The Agreement focuses on improving sales and use tax administration systems through various methods including but not limited to: simplification of state and local tax rates, simplifying tax returns and remittances, and the uniformity of major tax base definitions.
• October 2011 — Marketplace Equity Act Introduced in House (H.R. 3179)
  Representative Steve Womack introduced the Marketplace Equity Act, a similar bill to the Main Street Fairness Act, in order to authorize states to require all sellers conducting remote sales to collect and remit sales and use taxes. This bill requires this tax system to have exceptions for remote sellers with gross annual receipts not greater than $1 million (federal) or $100,000 (state), a single sales and use tax return for use by remove sellers, and a uniform tax base in the state.
• November 2011 — Marketplace Fairness Act Introduced in Senate (S. 1832)
  Senator Michael Enzi's bill is essentially the same as the Main Street Fairness Act, due to the reference to the Streamline Sales and Use Tax Agreement.

CCIM's Position:
CCIM Institute's statement of policy (105.5 Kb, PDF), first adopted in 2000 and most recently updated in 2010, states that CCIM members do not support federal legislation that, without consent and participation of state governments, would preempt states' efforts to address their own sales and use tax issues.

The CCIM Institute believes that economically equivalent transactions should bring similar tax consequences, and supports a level playing field for local in-store retailers and remote merchants (including Internet merchants).

Additionally, CCIM believes that loss of revenue due to failure to collect sales tax on goods sold over the Internet is likely to place pressure on state and local governments to find replacement revenue in the form of increased real estate and property taxes, income taxes, transfer taxes, and/or impact fees.

The CCIM Institute is also concerned that the erosion of state and local sales tax collections will encourage state and local governments to seek to expand their sales and use tax bases. In this regard, the CCIM Institute is firmly opposed to any expansion of government that would impose taxes on the cost of services, such as fees and other costs associated with the purchase and ownership of real estate.

The CCIM Institute supports efforts to simplify the collection and payment of state, local sales, and use taxes. State and local governments should be able to enforce existing sales and use-tax laws for both intrastate and interstate purchases.

On Nov. 23, 2011, CCIM signed on to a letter (33.8 Kb, PDF) to Senators Enzi, Durbin, and Alexander regarding Internet sales tax legislation. The letter supports the recently introduced Senate Bill 1832, the Marketplace Fairness Act, and brings attention to the inequity that brick-and-mortar retailers experience due to unfair competition with the Internet from the inability to regulate and enforce Internet sales tax. CCIM staff will continue to monitor this legislation and report back any changes when necessary.