ARLINGTON, Va., July 29, 2011 /PRNewswire-USNewswire/ -- The Retail Industry Leaders Association (RILA) welcomed Legislation introduced today by Senator Dick Durbin (D-IL) that addresses a fundamental unfairness in tax policy and closes a decades-old loophole that threatens retail jobs on Main Street.
Antiquated pre-Internet rules allow online retailers without a "physical presence" in a state to skirt the obligation of collecting and remitting state sales taxes, giving those e-tailers a perceived price advantage over local retailers. However, online sales are still subject to each state's respective sales tax. This loophole puts the burden on the consumer to report the sales tax owed from an online transaction on their state income tax return—a confusing burden largely unknown or overlooked by most consumers come tax season.
The Main Street Fairness Act would not raise anyone's taxes, but would simply require online-only retailers to collect sales taxes at the point of purchase like every other retailer. This would end special treatment for online-only retailers and relieve consumers of the legal burden to report the sales taxes they owe from online purchases.
"For too long U.S. tax policy has favored online-only retailers over the brick-and-mortar stores that create jobs and serve our communities," said Katherine Lugar, executive vice president for public affairs. "Government shouldn't be picking winners and losers by giving a handful of companies a competitive advantage over everyone else. It's time to close this decades-old loophole and level the playing for all retailers."
This year a number of states, including Texas, California and Illinois, took action to level the playing field in regards to sales tax collection, but only a comprehensive federal solution will effectively close this loophole in all states across the country.
RILA is the trade association of the world's largest and most innovative retail companies. RILA members include more than 200 retailers, product manufacturers, and service suppliers, which together account for more than $1.5 trillion in annual sales, millions of American jobs and more than 100,000 stores, manufacturing facilities and distribution centers domestically and abroad.
SOURCE Retail Industry Leaders Association