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Lawmakers again consider allowing states to force online shops to charge sales tax

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Though previous sales tax fairness legislation failed to advance through the gridlock in Washington, federal legislators have reintroduced a bill that would allow states to force online retailers to collect the tax. That has revived New Jersey brick-and-mortar stores' push for a level playing field against increasing e-commerce competition, the head of a state retail association said.

New Jersey retailers previously pressed for a state solution to the sales tax loophole for their online-only competitors, but that effort stopped short in May, when the Gov. Chris Christie administration cut a deal with Amazon.com to collect 7 percent sales tax on purchases made within the state starting July 1, 2013.

In his announcement of the compromise, Christie estimated New Jersey will collect between $30 million and $40 million in additional sales tax revenue from Amazon each year, but New Jersey Retail Merchants Association President John Holub said the state would collect roughly 10 times that amount in additional sales tax revenue in 2015 if all e-commerce transactions are captured under the proposed federal law.

“Amazon is only one piece of the puzzle. Even though it’s the largest online-only retailer, there are still plenty of other offenders — like the Overstock.coms of the world — who continue to exploit the loophole and put our brick-and-mortar retailers at a competitive disadvantage,” Holub said.

“Now, in Washington, there’s clear momentum to put a stop to that once and for all, and in the coming weeks, we’re going to focus on engaging the New Jersey delegation to join the effort. It should be a no-brainer, as it’s the most important piece of legislation they could support to help out Main Street.”

Just as the state attempt froze in the Legislature following the Amazon deal, national e-fairness legislation stalled in the last Congress, though Holub said the bipartisan reintroduction of the Marketplace Fairness Act in the 113th Congress on Thursday has given the sales tax fairness effort momentum and boosted retailers’ confidence that a federal solution will finally pass after more than two decades of debate in Washington.

David French, senior vice president for government relations of the National Retail Federation — which recently formed a coalition in support of the bill with the International Council of Shopping Centers and other industry groups — said in a statement the bill “reinforces free and fair competition in the marketplace, protects states’ rights and brings much-needed simplification to the nation’s complex sales tax system.”

“For far too long, local retailers and small-business owners have been saddled with a competitive disadvantage with online retailers — sales taxes,” French said in a statement. “As e-commerce continue(s) to increase in market share, it’s time Congress allows all retailers to compete on the same playing field.”

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