[Congressional Record (Bound Edition), Volume 159 (2013), Part 5]
[Senate]
[Pages 6301-6303]
[From the U.S. Government Publishing Office, www.gpo.gov]




                        MARKETPLACE FAIRNESS ACT


                               Tax Issues

  Mr. ENZI. Madam President, the Marketplace Fairness Act is about 
States' rights and giving States the right to decide to collect or not 
collect taxes that are already owed. Critics

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have claimed that we are creating a new Internet sales tax, that 
businesses would have to remit sales taxes to 9,600 different tax 
jurisdictions, and that today's software simply isn't capable of 
helping businesses collect sales tax.
  Nothing could be farther from the truth. On the issue of creating a 
new tax or imposing new taxes, we made it clear in section 3(d) of the 
legislation that nothing in the bill encourages a State to impose sales 
and use taxes on any goods or services not subject to taxation prior to 
the date of enactment. This includes imposing sales and use taxes on 
financial transactions or services and any other good or service that a 
State may be considering.
  We also made it clear that nothing in this legislation limits the 
existing authority of States to impose State and local sales and use 
tax on and collect such taxes directly from the purchaser. As a former 
mayor and State legislator, I strongly favor allowing States the 
authority to require sales and use tax collection from retailers on all 
sales for each State that chooses to do so. We need to implement a plan 
that will allow States to collect revenue using mechanisms already 
approved by their local leaders.
  I would like to ask my friend Senator Alexander to help me respond to 
some of these concerns because he has been vocal about States' rights 
and that this has nothing to do with taxing the Internet.
  Mr. ALEXANDER. Madam President, I thank Senator Enzi for this 
opportunity, and in fact there is a Federal moratorium that prohibits 
State taxes on access to the Internet. I was in the middle of that 
debate several years ago, and when the Marketplace Fairness Act is 
enacted that ban will still be there. In other words, today there is a 
Federal ban on Internet access taxes, and after this law passes, there 
will continue to be a ban on Internet access taxes. This issue is not 
about taxing the Internet, it is about the collection of State sales 
and use taxes that are already owed.
  The complexities raised by our critics are unfounded, and I would 
like to ask Senator Durbin what his thoughts are on these claims.
  Mr. DURBIN. Madam President, first, let me thank my colleagues 
Senator Enzi, Senator Alexander, and Senator Heitkamp for their work on 
this important issue.
  Senator Alexander is right about the Federal ban on Internet access 
taxes. I also want our colleagues to know that the Marketplace Fairness 
Act would dramatically simplify and streamline the country's more than 
9,600 diverse State tax jurisdictions.
  The bill provides States with two options that would allow them to 
begin collecting State sales taxes from online and catalog purchases. 
Both options would reduce the number of returns and audits businesses 
would have to file from 9,600 to fewer than 50.
  The bill also exempts businesses with less than $1 million in online 
or out-of-State sales from collection requirements. This small business 
exemption will protect small merchants and give new businesses time to 
get started.
  Critics of the bill should not get away with saying this type of 
simplification can't be done. The different tax rates and jurisdictions 
are no problem for today's software programs. When you order something 
online, you have to put in your zip code. The zip code will tell you 
exactly how much is owed in sales and use taxes. As Senator Alexander 
has said, it is as simple as looking up the weather.
  We also made it very clear in the bill that States cannot require 
remote sellers to collect sales and use taxes already owed under State 
and local law until the State implements sales and use tax 
simplification requirements and is able to provide software to sellers 
free of charge.
  Our goal is to allow States to satisfy the requirement to provide 
software free of charge under section 2(b)(2)(D)(ii) of the Act either 
by developing the software themselves or by using the services of 
certified software providers. If a remote seller elects to deploy and 
utilize a certified software provider, the seller should be permitted 
to deploy and utilize a certified software provider of their choice per 
section 3(c) of the Act. It is not our intent to allow or encourage 
States to require remote sellers to use the software provided by the 
State or certified software providers or penalize remote sellers for 
not using such software or certified software providers.
  Now I want to go back to an issue my colleague, Senator Enzi, 
mentioned earlier. This bill does not expand or enlarge the authority 
of States to impose sales and use taxes on products or services. And it 
does not urge States and localities to impose financial transaction 
taxes. The bill only applies to sales and use taxes, so financial 
transactions taxes are excluded from the authority under the Act.
  In almost 200 years of sales and use tax history in the United 
States, no State or locality has imposed a sales or use tax on 
financial transactions and no State is proposing to do so today. The 
Marketplace Fairness Act simply authorizes States to require remote 
sellers to collect taxes that are already owed under current law. As my 
colleague said, the bill is very clear and states:
  (d) NO NEW TAXES.--Nothing in this Act shall be construed as 
encouraging a State to impose sales and use taxes on any goods or 
services not subject to taxation prior to the date of the enactment of 
this Act.
  I would like to ask my friend Senator Enzi if he agrees.
  Mr. ENZI. Yes, we were deliberate by including language in the 
Marketplace Fairness Act to authorize States to require remote sellers 
to collect taxes that are already owed under current law. It was not 
our intention to urge States and localities to impose other taxes not 
associated with sales and use taxes.
  Another issue that my colleagues and I want to make clear is the 
reason we included language in the perfecting amendment recognizing 
tribal sovereignty. Tribes that have adopted sales taxes have the same 
concerns as States about the collection of taxes on remote sales. 
During the drafting and consideration of this legislative concept in 
2005, Senator Byron Dorgan of North Dakota and I began working with the 
National Congress for American Indians and the National Governors' 
Association to find common ground to allow tribal governments the 
opportunity to participate in the Streamlined Sales and Use Tax 
Agreement, SSUTA. After 2 years of deliberation, tribal government 
legislative language was included in the Main Street Fairness Act bill 
introduction in 2007.
  Although not included in the introduced version of the Marketplace 
Fairness Act this year, tribal governments requested the ability to 
collect sales and use tax if they choose to participate in the 
alternative system, not the SSUTA. Those tribal governments who 
participate in a streamlined system would agree to the same rules as 
the States who participate in that system. At this time, the Senate 
bill includes tribal governments in the ``State'' definition. Although 
some may disagree, I do encourage my House colleagues working on the 
Marketplace Fairness Act to further review this specific policy issue 
when the bill is debated in the U.S. House of Representatives.
  This is a very important issue that Senator Heitkamp has experience 
with, and I would ask her to share her comments with our colleagues. I 
also want to say yet again how grateful, and lucky, we are to be 
working with Senator Heitkamp on this issue. She has been working to 
solve this problem for even longer than I have, and I want to ask her 
for her thoughts on the legislation.
  Ms. HEITKAMP. Madam President, I thank Senator Enzi, Senator Durbin, 
and Senator Alexander for their leadership on the Marketplace Fairness 
Act and am proud to join them to address an issue I have been working 
on for just over 20 years now.
  Tribes that have adopted sales taxes are faced with the same 
situation as States with regard to the collection of taxes on remote 
sales. Tribal governments provide essential government services to 
their communities, and including them in the Marketplace Fairness Act 
simply gives them the equal footing that they deserve.

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  Tribal governments that attempt to collect sales and use taxes from 
remote sellers will have to follow the same streamlined requirements 
that all States must use, including software and audit compliance. 
Additionally, the software provided--free-of-charge--to remote sellers 
under this bill can easily calculate sales tax at the point of sale. 
Most tribal governments will negotiate agreements with their States to 
provide for the collection of sales and use taxes from remote sellers 
and remittance to the tribe. As a result, businesses will have no 
additional burden.
  It is important to note that this bill does not authorize States to 
collect a tax on sales to tribal members in Indian country. Under the 
bill's sourcing rules, read in conjunction with the definition of 
``State,'' a sale within a tribe's jurisdiction would be subject only 
to the tribal tax, and not to a non-tribal State or local tax. It is 
not the intent of the bill to subject such a sale to dual taxation--
State and tribal--or to extend State taxation to tribal members 
residing in Indian country.

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