November 28, 2018

Shaheen Leads Group of Senators Calling on Senate Leadership to Act Now to Protect Small Businesses from Burdensome Sales Tax Collection Requirement

(Washington, DC) – U.S. Senator Jeanne Shaheen (D-NH), a member of the Senate Small Business Committee, sent a letter with Senators Ron Wyden (D-OR), Jeff Merkley (D-OR) and Maggie Hassan (D-NH), calling on Senate Leadership to take action before the end of the year to protect small businesses from red tape resulting from the U.S. Supreme Court’s decision in South Dakota v. Wayfair, Inc. In the wake of the ruling, many states have passed laws requiring out-of-state small businesses to start collecting sales taxes as soon as January 1st. The letter requests a delay to allow more time for Congress to enact protections for small businesses and urges a ban on retroactive collection requirements.

The Senators wrote, “While we disagree with the decision and believe it should be overturned, we hope to work with you to, at a minimum, enact robust protections for small businesses … Some states have established implementation dates as soon as January 1, 2019. As the Government Accountability Office has noted, integrating sales tax collection will require significant time and ‘labor intensive’ start-up costs for small businesses. We do not believe it is realistic to ask small businesses to have these new systems set up shortly after the holiday season, which is the busiest time of year for retailers. This is especially true in states where firms have no experience collecting sales taxes.”

Under South Dakota v. Wayfair, Inc., and without action from Congress, some New Hampshire small businesses will be forced to collect sales tax for 46 other states. In their letter, the Senators also urge Senate Leadership to enact a moratorium on collection requirements and a prohibition on retroactive authority to provide necessary time for small businesses to adjust and comply with new regulations and requirements.

The Senators continued, “A moratorium would provide much-needed time for small businesses. Previous Congressional consideration of remote sales tax legislation shows that there is bipartisan support for a runway, or phase-in period, for small businesses to comply with any new collection requirements... We must also ensure that small businesses are not subject to retroactive sales tax collection requirements. While the Court’s decision pointed to South Dakota’s lack of retroactivity, there is no guarantee that states will not take action against defenseless out-of-state small businesses. We believe a statutory ban on retroactive state sales tax collection is necessary to ensure that small businesses are not punished by cash-strapped states they have no relation to.”

The letter can be read in full here.

Senator Shaheen successfully led efforts to stop the Marketplace Fairness Act, which was first introduced in 2011 to impose these internet sales tax collection requirements. She previously worked with Senators Wyden and Hassan as part of a bipartisan, bicameral group of members of Congress to file an amicus brief in the South Dakota v. Wayfair, Inc. case, in opposition to South Dakota’s argument. The Supreme Court’s dissenting opinion cites a Government Accountability Office report that was requested by Senator Shaheen detailing the burdens that a sales tax collection requirement will place on small businesses. In June, Shaheen introduced legislation with Senators Jon Tester (D-MT), Merkley and Hassan – the Stop Taxing Our Potential (STOP) Act – to overturn the Supreme Court case.

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