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Shopping Center Industry Supports New Federal Online Sales Tax Bill

October 12, 2011

Shopping Center Industry Supports New Federal Online Sales Tax Bill

Marketplace Equity Act would close online sales tax loophole, level the playing field for all retailers

WASHINGTON, October 12, 2011 -- Representatives Steve Womack (R-AR) and Jackie Speier (D-CA) today announced the introduction of the bipartisan Marketplace Equity Act in the U.S. Congress. Currently, Internet retailers are required only to collect sales taxes in states where they have a physical nexus (store, office, warehouse, or distribution center). If enacted, the MEA would empower states to collect sales taxes already owed at the point of purchase from online retailers who may not have a physical nexus in the state, but sell millions of dollars in merchandise there. Reps. Womack and Speier were joined at today's press conference by small business owners from Arkansas, California, Maryland, Michigan, Ohio, Pennsylvania, Texas, Tennessee and Utah.

"Closing the online sales tax loophole is not a partisan issue, but rather an issue of fairness," said David B. Henry, chairman of the International Council of Shopping Centers (ICSC). "Each day, brick-and mortar retailers operate at a competitive disadvantage to remote sellers who don’t collect sales tax. The loophole was created by a 1992 Supreme Court decision at a time when the internet was a mere shadow of what it is today. The MEA is a necessary step toward establishing a new, 21st century marketplace that considers both brick and mortar and online retailers, while protecting consumers who use and benefit from both."

In a key component of the MEA, small businesses will be exempt from collecting sales taxes on internet transactions. As it stands now, most states already have what is known as a "use tax," similar to a sales tax. When an online retailer fails to collect the sales tax, it falls to the consumer to report that tax directly to the state, which is often not done. This practice has given rise to the misperception of tax-free shopping online, and efforts to close the loophole are often mistaken for a new tax. The MEA is not a new tax; it simply gives states the power to collect revenue they are already owned at the point of purchase.

"We welcome the introduction of the MEA by Representatives Womack and Speier," said Michael P. Kercheval, president and CEO of ICSC. "Our country is long-overdue for a national solution to sales tax collection that is viable and equitable for all retailers. This tax loophole currently enjoyed by online sellers has jeopardized local businesses and the jobs they provide. Congress must level the playing field to give brick and mortar stores a fair chance to compete with online sellers in a thriving marketplace."

ICSC has promoted sales tax fairness for over a decade, advocating that a "sale is a sale" regardless of whether the purchase takes place on Main Street, at shopping center, via mail-order or over the Internet.

Founded in 1957, ICSC is the premier global trade association of the shopping center industry. Its more than 55,000 members in over 90 countries include shopping center owners, developers, managers, marketing specialists, investors, retailers and brokers, as well as academics and public officials. As the global industry trade association, ICSC links with more than 25 national and regional shopping center councils throughout the world. For more information, visit