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Chuck Haga, Forum News Service, Published June 06 2013

Heitkamp online sales tax bill sales hits snag in House

GRAND FORKS – The chairman of the U.S. House Judiciary Committee announced Thursday that he did not expect the Senate-passed Marketplace Fairness Act to pass the House, which one advocacy group celebrated as effectively killing the bill that Sen. Heidi Heitkamp, D-N.D., pushed through the Senate last month.

The bill would require online companies to collect sales tax, similar to what brick-and-mortar businesses are required to do. Heitkamp has said the bill would help states and cities collect about $23 billion annually in taxes they are owed, which would “help balance their budgets without cutting services or increasing taxes.”

But Rep. Bob Goodlatte, R-Va., said the bill is unfair to consumers.

“Transactions on the Internet are going to increase,” he said in a statement released Thursday. “It’s obviously something where we want to make sure that the many, many businesses … who do business online … are treated fairly,” even if they are not seen because they have no storefronts.

Goodlatte’s announcement was cheered by the youth-oriented advocacy group Generation Opportunity, which claimed to have influenced the decision by organizing more than 3,000 young activists to send messages to the congressman’s Facebook page.

“Today was a good day for young people,” said Evan Feinberg, president of Generation Opportunity, in a news release. “My generation sent a loud and clear message to Washington that we will oppose efforts to tax or regulate the Internet. The Internet tax would have disproportionately harmed my generation, as we do a greater share of our shopping online than older generations.”

He said members of the “millennial” generation “already have it tough, facing the highest sustained youth unemployment since World War II,” and have organized to oppose this and other attempts to regulate the Internet.

Generation Opportunity describes itself as “a national, nonpartisan organization advocating for economic opportunity for young people through less government and more freedom.”

In a statement issued by his office, Goodlatte said he has “serious concerns regarding the Marketplace Fairness Act passed by the Senate,” but he is “open to considering legislation concerning this topic and the House is working on alternatives to the bill passed by the Senate.”

In a telephone interview Thursday, Heitkamp said the Generation Opportunity criticism “unfortunately is really misguided,” as the tax on online sales “is a tax already owed” and the counterpart to tax “paid by people who walk into our Main Street businesses – which employ many young people.”

She said she “had a good conversation” about the issue with Goodlatte two months ago, and she is “disappointed the chairman is stopping the discussion this early. … But nothing is moving through the House. …

“What’s going to move this is constituent groups who step forward and push for it,” she said, citing Best Buy as an example of brick-and-mortar companies that believe the failure to collect sales tax on Internet sales puts their stores at a distinct disadvantage.

Heitkamp was a lead sponsor of the Internet tax bill and championed it in her maiden speech on the floor of the Senate on April 22, calling for the federal government to “level the playing field” and allow states to collect sales taxes on Internet sales.

The bill, which passed the Senate with bipartisan support May 5, continued an effort she had made more than 20 years ago when, as North Dakota tax commissioner, she worked to get mail-order catalogue companies to pay the appropriate sales tax in states where they did business.

That fight went to the U.S. Supreme Court, which ruled that it was an issue for Congress to resolve.

“Congress has the obligation to regulate interstate commerce,” Heitkamp said in April. “Remote sales (over the Internet) are getting bigger, and our Main Street businesses are continuing to suffer.”

She said the operators of small businesses in North Dakota had told her of customers coming in to inspect and get specifications on certain items, then leaving and buying the items online for less because they were not charged sales tax.

“Make things fair,” she said.

Sen. Mitch McConnell, R-Ky., the minority leader, opposed the bill, saying it would put “an enormous compliance burden” on small businesses, but a number of Republicans – including Sen. John Hoeven of North Dakota – voted for it. Heitkamp said tax-computing technology has advanced in recent years and the obligation to collect the tax would not be burdensome.