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

DMA Warns that H.R. 3396 Would ‘Seriously Jeopardize’ E-Commerce

and Impede An Open-Market Economy

Washington, DC, 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.”

About Direct Marketing Association (DMA)

The Direct Marketing Association (www.the-dma.org) is the leading global trade association of businesses and nonprofit organizations using and supporting multichannel direct marketing tools and techniques. DMA advocates standards for responsible marketing, promotes relevance as the key to reaching consumers with desirable offers, and provides cutting-edge research, education, and networking opportunities to improve results throughout the end-to-end direct marketing process. Founded in 1917, DMA today represents nearly 3,600 companies from dozens of vertical industries in the US and 50 other nations, including a majority of the Fortune 100 companies, as well as nonprofit organizations.

In 2007, marketers — commercial and nonprofit — are forecast to spend $173.2 billion on direct marketing in the United States. Measured against total US sales, these advertising expenditures will generate approximately $2.025 trillion in incremental sales. In 2007, direct marketing will account for 10.2 percent of total US gross domestic product. Also, there are today 1.6 million direct marketing employees in the US alone. Their collective sales efforts directly support nearly 9.0 million other jobs. That accounts for 10.6 million US jobs.

The Power of Direct: Relevance. Responsibility. Results.

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