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Originally published Thursday, August 22, 2013 at 4:07 PM

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Guest: Federal act will help states recoup taxes on Internet sales

The proposed federal Marketplace Fairness Act will help states recoup the sales taxes due on Internet sales. State Reps. Ross Hunter and Reuven Carlyle write about the system that makes it easy on businesses.

Special to The Times

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BEFORE anyone could even imagine the Internet, the U.S. Supreme Court exempted most online and catalog purchases from a majority of sales taxes across the country, creating a chaotic patchwork of inconsistency and unfairness.

Today, to update our nation’s tax code, Congress is considering the Marketplace Fairness Act, a bill that would require Internet and traditional brick-and-mortar sellers to follow the same rules in each state and collect the sales tax that is legally due in the buyer’s state.

In a Sunday column, Peter Ollodart, president of a Tacoma company, throws his hands up at the prospect of filing sales-tax returns in 45 states, and consequently is lobbying against it [“An Internet tax? We can’t pay it,” Opinion, Aug. 18].

His concerns were reasonable in 1967 when the Supreme Court set this system up: too many jurisdictions with different rules, exemptions and categories. It was too complicated to file returns and follow different rules and exemptions in every state, especially when it all had to be done manually.

If Ollodart and other small businesses really had to do all that manually today, we’d agree with him. It would be crazy. The reality is that it’s not too complicated today.

• All versions of the bill require the states to pay for software that is currently available to help business collect the tax. The programs hook into QuickBooks and other popular small-business accounting and Web platforms, figure the tax for each transaction and file all the returns centrally, using similar technology to what vendors use to figure shipping costs.

• More than half the states that collect sales tax are part of a compact that requires identical categorization, consistent treatment of holidays, exemptions and wholesaling rules. The other states will have to make required simplifications to be able to require collection. You better believe they’ll make the changes in the blink of an eye once the bill passes.

• Technology is in a different place today than it was in 1967 when the original Supreme Court decision came out, tax laws are simpler and the Internet makes this all work.

If our local main-street businesses that produce jobs in Washington have to collect sales tax, it’s patently unfair that out-of-state online sellers don’t. We need consistent tax policy that applies to everyone.

In today’s hyperpartisan U.S. Senate, the Marketplace Fairness Act passed 69-27, a big bipartisan vote, and it has supporters on both sides of the aisle in the House. Strong tea-party opposition in the House is blocking this bipartisan solution from even coming to a vote.

Between now and 2017, this reform would mean almost $400 million more to public schools in Washington of taxes that are already in the law.

The bill is a much-needed modernization of our nation’s tax code. It is responsible, fair and consistent. It would even the playing field for our local businesses that have to compete with Internet sales on which there is no sales tax collected.

State Rep. Ross Hunter, D-Medina, is chairman of the House Appropriations Committee. State Rep. Reuven Carlyle, D-Seattle, is chair of the House Finance Committee.


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