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DMA Expresses Disappointment with ‘Marketplace Fairness Act’


Post Date: February 14, 2013
By: dma

 Contact:    Susan Taplinger  212.790.1589   staplinger@the-dma.org

New York, NY, February 14, 2013 — The Direct Marketing Association (DMA) expressed disappointment with the introduction today of the “Marketplace Fairness Act” in the Senate by Senator Dick Durbin (D-IL) and in the House of Representatives by Representative Steve Womack (R-AR). The bill, including the section codifying the Streamlined Sales and Use Tax Agreement, does not provide the needed harmonization across state taxing structures. Neither does it sufficiently reduce the deficiencies that led the Supreme Court in its 1992 Quill v. North Dakota decision to restrict states from requiring remote sellers to collect sales tax in the first place.

This bill would grant states the authority to reach beyond their borders to conscript American businesses with no presence in the state and force them to become the unpaid tax collectors for the state. This is bad policy as it interferes with the free flow of commerce among the states, a principle upon which the United States was founded. In these difficult economic circumstances, placing new, unfunded mandates on out-of-state companies to comply with complex and changing tax structures, tax holidays, and tax thresholds in many states around the country will hamper e-commerce, a fast growing segment in our economy.

The bill, which purports to simplify the American sales tax system, actually expands it. The bill allows:

• States to maintain nearly 10,000 local sales tax jurisdictions with their own tax rates, tax holidays and thresholds;

• 46 states to conduct their own audits of conscripted American businesses across the country (requiring those businesses to hire tax attorneys, etc.);

• 46 states to create their own definitions of what each taxable good is (how much juice in a drink is needed to not be classified as a soft drink, for example);

• 46 states to interpret key terms for collection of sales tax, such as defining a “sales price,” and

• 46 states to create their own tax return, filing schedule and deadlines.

This bill also enters a troubling area by allowing the long-arm of state taxing authority to grab non-citizen businesses. There is no preemption of state attempts to stretch sales and use tax laws beyond their borders to hook out of state businesses. The Marketplace Fairness Act allows such action. This is a dangerous road — one which should not be taken.

DMA believes that Congress should reject this effort and instead seek real efficiency and harmonization among state taxing regimes in order to achieve a truly streamlined system of sales tax collection. Simplification — this is not.

About Direct Marketing Association (DMA)

The Direct Marketing Association (www.the-dma.org) is the world’s largest trade association dedicated to advancing and protecting responsible data-driven marketing. Founded in 1917, DMA represents thousands of companies and nonprofit organizations that use and support data-driven marketing practices and techniques.

In 2012, marketers — commercial and nonprofit — spent $168.5 billion on direct marketing, which accounted for 52.7 percent of all ad expenditures in the United States. Measured against total US sales, these advertising expenditures generated approximately $2.05 trillion in incremental sales. In 2012, direct marketing accounts for 8.7 percent of total US gross domestic product and produced1.3 million direct marketing employees in the US. Their collective sales efforts directly support 7.9 million other jobs, accounting for a total of 9.2 million US jobs.

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