In US House Testimony, DMA Opposes Mandatory Sales Tax Collection Bill

December 6, 2007 — The Direct Marketing Association’s (DMA) tax counsel George Isaacson today testified before the House Judiciary Subcommittee on Commercial & Administrative Law in opposition to the Sales Tax Fairness and Simplification Act (H.R. 3396). Introduced by Rep. William Delahunt (D-MA), the bill would make interstate sales tax collection mandatory — regardless of whether the seller has a physical presence or “tax nexus” in the taxing state.

In his testimony, Isaacson said, “Expanded and overlapping state tax jurisdictions would seriously jeopardize the continued growth of electronic commerce in the United States, and it would impede the access of small and medium-sized companies to a nationwide market.” He added that, “if enacted, H.R. 3396 would result in an unprecedented expansion of state taxing authority.”

Isaacson told the members of the House panel that the Streamlined Sales Tax Agreement (SSTA) referenced in the legislation is “a document drafted by tax administrators, and — as might be expected — it resulted in little in the way of tax simplification.”

“Congress,” he added, “should not endorse this misnamed exercise in state tax reform.”

Commenting on today’s hearing on H.R. 3396, Steven K. Berry, DMA’s executive vice president for government affairs and corporate responsibility, noted, “The US Constitution, with its Interstate Commerce Clause, has been critical to maintaining a national open-market economy. Accordingly, the last thing Congress should do is endorse legislation, which would stifle that open market with a burdensome regime of tax-collection requirements.”

Isaacson called the Streamlined Sales Tax Agreement an example of “low-bar” tax reform that, from the outset, has “proven to be a moving target of increasing complexity and decreasing uniformity.” He pointed out that that SSTA:

· Fails to reduce the 7,600 varying tax rates across the United States;

· Fails to reduce the burden of tax collection, remittance of tax, and audits placed on interstate marketers; and

· Fails to guarantee fundamental fairness with respect to vendor compensation for tax collection.

Isaacson concluded his testimony by citing that the SSTA is “fundamentally flawed” and “has not achieved meaningful sales and use tax reform.”

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