A panel of industry officials argued that Congress should extend the current moratorium on new Internet-transaction taxes beyond October.
Testifying before the Senate Commerce Committee on behalf of the Direct Marketing Association, Frank Julian, a tax lawyer for Federated Department Stores Inc., said the extension was “essential to ensuring neutral tax treatment for electronic commerce.” Allowing the moratorium to expire, he warned, “would send a signal to the states that it is now permissible for them to treat electronic commerce differently from transactions using other channels.”
Industry groups, he noted, support passage of the Internet Tax Nondiscrimination Act (S-288) introduced last month by Senator Ron Wyden (D-OR). This bill requires states to develop a simplified, nationwide use tax rate and structure, with subsequent Congressional permission, to impose on remote sales.
Neither Julian nor any of the other industry witnesses expressed support for a similar bill, the Internet Moratorium and Equity Act (S-512), that Senator Byron Dorgan (D-ND) introduced earlier in the month.
That bill would authorize states to tax all remote sales, whether by mail, telephone, Internet or any other direct response vehicle, at a single, uniform rate through participation in an Interstate Sales and Use Compact. The legislation would also extend the existing moratorium on new Internet taxes to Dec. 31, 2005.
Julian agreed that “substantial simplification of the sales tax systems will make it much easier for the states to administer and enforce the tax, and will make it much easier for sellers to comply with tax collection requirements.”
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