Contributed by Andrew Vehorn, Capital Results, Richmond

Retail Alliance Board Member Alison Anderson, owner of A. Dodson’s, joined retailers from around the Commonwealth and the nation in Washington, D.C. on Wednesday, June 11th for a Small business fly-in to lobby Congress on e-fairness legislation.

Joining Anderson were Sarah Paxton and Andy Thornton, owners of La Diff Furniture in Richmond, VA, Larry Davidson, owner of Davidson’s Clothing in Roanoke, and Tina Miller, owner of Ladles and Linens in Roanoke, Lexington, and Richmond, Va.

Marketplace Fairness color photoThe group met with House Judiciary Chairman, Congressman Bob Goodlatte, Senator Tim Kaine and staffers from the offices of Rep. Randy Forbes and Senator Mark Warner.

The national fly-in comes on the heels of a March 4th Judiciary Committee hearing on various approaches to address remote sales tax collection. From the hearing, there is near unanimous agreement by committee that there currently is an unlevel playing field with regards to online vs. in store sales tax collection. The question now is how the best resolve the issue.

In September, Congressman Goodlatte released a set of guiding principles for the Judiciary Committee in taking up e-fairness. Congressman Jason Chaffetz (R-UT) was deputized to draft a House bill. Chaffetz made modifications to the Senate-passed Marketplace Fairness Act that protected small businesses from overly burdensome requirements.   States could require online retailers to collect and remit sales taxes on internet purchases. The sales tax rate would be the purchaser’s home state rate, and would be calculated through software. States would cover the compliance and integration costs of the software, and are audit protections stating states can only audit software providers, not retailers.

Goodlatte did not like what Chaffetz presented, and has opted to draft his own bill.

Congressman Goodlatte, while not making his plan public, has floated a solution called “hybrid origin sourcing”.   Hybrid origin sourcing in a convoluted scheme, whereby rather than collecting Virginia sales tax, the California online retailer would collect California sales tax; remit to the California Department of Taxation. The California Department of Taxation would then remit the sales tax to a newly formed quasi-governmental agency that would redistribute the sales tax back to Virginia.   To further complicate matters, in states that do not have a sales tax, retailers must track individuals purchases and submit purchase and customer data to the buyers home state for collection.

The Retail Alliance and its statewide lobbying arm, the Virginia Retail Federation, believe that any legislation that uses an origin-based sourcing scheme is a non-starter. It does not provide parity to local businesses, as tax rates are not the same. It also puts very burdensome requirements on retailers to track customer purchases. We believe the Chaffetz plan is the best alternative, and that Congressman Goodlatte’s desire for a solution “so simple no software is required” is a red herring.

As Alison Anderson aptly noted in her interview with the Suffolk News Herald “If you are smart enough to have an online store, you are smart enough to download the tax software.”

We hope Congressman Forbes will reject any origin sourcing plan, and instead support the simplicity of the plan crafted by Representative Jason Chaffetz. v