Mr. ENZI. Mr. President, I rise today to urge my colleagues to vote for the Marketplace Fairness Act in just over an hour or so from now. I have said many times over the past few weeks--and, in fact, I have been saying it for the past 12 years as I have worked on this issue, but it is worth repeating--this bill is about fairness. It is about leveling the playing field between the brick and mortar and online companies and it is about collecting a tax that is already due. It is not about raising taxes, taxing the Internet, or taxing Internet access.
This bill in general, and this bill in particular, has grabbed the attention of Members of the Senate and their constituents back home. Unfortunately, the misinformation that is being disseminated by many has added confusion and anxiety about what the bill does and does not do. For example, the Americans For Tax Reform sent me a detailed letter last week asking many questions. It appears the letter was not meant to find resolution or a path forward with this issue but ultimately to confuse my colleagues prior to tonight's vote. Senator Alexander and I responded to the 16 questions in order to provide clarity for the organization and its members.
Mr. President, I ask unanimous consent to have printed in the Record the two letters to which I just referred.
There being no objection, the material was ordered to be printed in the Record as follows:
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Mr. ENZI. I would encourage everyone to read the bill. It is short--11 pages. You don't see many like this. You can see through that; right? It is a bill you can read from beginning to end and you can understand what it does, which is very unusual for Washington. It is not like a lot of bills that simply make changes to other bills and require you get hold of those other bills and read them to figure out what is going on. This bill is straightforward.
If a State meets the simplification requirements outlined in the bill, it may choose to require collection of sales taxes that are already due. Congress is not forcing States to do anything. And if States do act, they are collecting taxes already due by consumers--folks such as you and me.
One of the issues that received much attention while debating this bill the past few weeks is the issue on audits. There is some concern small businesses will be subjected to onerous and time-consuming audits by State and local governments if those governments start requiring they collect sales taxes on these remote sales. It is critical to keep in mind that sellers that have under $1 million in remote sales in 1 year are not required to collect and would not be subject to an audit from any out-of-State government.
In order to obtain authority to require remote sellers to collect, and therefore even have the potential of being audited by remote governments, States either must join the Streamlined Sales Tax and Use Agreement--and I will refer to that as the Streamlined States--or they can simplify their tax structure by creating a single entity within the State responsible for all State and local taxes and use tax administration and audits; establishing a single audit statewide; limiting collection to a uniform State and local tax base; allowing a single sales and use tax return; and providing the program to figure the tax with no liability to the retailer and, therefore, no need for an audit.
For States that join the Streamlined Sales Tax and Use Agreement, a remote business would only be subject to a single audit for participating streamlined States, eliminating the possibility of audits by local governments and the probability of an audit.
For States that do not join the streamlined States but choose to participate in the alternative simplification system outlined in the bill, a business would also be limited to a single audit, per State, per year.
Practically speaking, there is no possibility that streamlined States or non-streamlined States would ever be able to perform significant audits of remote sellers.
Today, the States audit less than 1 percent of retailers inside their borders. Auditing remote sellers would require additional resources and travel and is simply not a realistic possibility.
For audits that are performed under the new system, the Marketplace Fairness Act demands that States adopt uniform audit procedures which would simplify and reduce business administrative expenses.
Sellers who use the certified sales tax administration software would either not be audited or would have limited scope audits to determine that the software was properly installed.
In addition to the audit protection the Marketplace Fairness Act provides, participating States are required to establish and maintain an accessible database of geographically based tax rates and tax base information to make it easier for remote sellers to collect taxes. These states are also required to hold those sellers harmless for errors in the database.
Compared to today's sales tax administration, where sellers are expected to research and comply with tax rate and tax base information and to understand jurisdictional boundaries without help from the state and local governments, the Marketplace Fairness Act dramatically reduces administrative burden and audit risk.
Some opposed to this bill go so far as to say that this potential overreach of State and local governments will lead to taxation without representation. The Marketplace Fairness Act includes significant benefits for remote sellers, including limits on audits, liability protections, and tax and administrative simplification. The tax is imposed on the consumer by the State where they reside pursuant to tax rates and a tax base established by the State and local governments. This serves as the ultimate check on excessive taxation. Because this tax is imposed on the consumer, there is no danger of taxation without representation.
Another concern raised by a few of my colleagues is that businesses will leave the United States, set up shop outside our borders, and sell into the United States, presumably only because of a sales tax collection requirement. It is important to note that States currently enforce collection of State taxes against foreign businesses with no physical presence in the United States, and have a number of methods to compel collection by foreign sellers, including liens, levies, and seizure of assets. The Marketplace Fairness Act treats foreign corporations the same as it does domestic corporations. All online retailers that make over $1 million in remote sales, regardless of where the retailer is located, must collect and remit sales tax to States that require it.
I would say this. No one works on a bill such as this, works on it 12 years, as a popularity contest. You have to be doing what is right. I have listened to the people, talked to the people, and know this is something that is going to be necessary to keep Main Street in business so people will have the ability to go to the store and make a selection and try the goods, feel the goods, and know it is right and that retailer is not going to have to worry about the person using their iPhone to get the barcode and order it from somebody else because of a sales tax difference. That is what will keep Main Street viable and the downtowns making it look like there is a growing community.
In conclusion, I thank everyone associated with this bill for their hard work and efforts in getting us to this point. I thank Senators Alexander, Durbin, and Heitkamp for their unwavering support of this bill and moving it forward in the Senate. I thank all of the cosponsors of the bill. I very much appreciate their support. I thank all the businesses, the trade groups, the constituents who provided constructive feedback as we have attempted to address, as best we can, all the concerns that have been raised.
I thank all of the staff who have worked on this issue--on my staff, my legislative director Randi Reid. She has worked on this as long as I have. She is probably, on the Hill if not the country, the expert on marketplace fairness or any of the other titles this kind of bill may have had.
I also thank my tax counsel, Eric Oman; Corey Tellez, Beth Cook, Dena Morris, Reema Dodin, MJ Kenny; Ben Garmisa on Senator Durbin's Staff; Allison Martin, Michael Merrell, and David Cleary on Senator Alexander's staff; Jillian Fitzpatrick on Senator Heitkamp's staff; and all of the staffs of the bill's cosponsors and all of the people in offices that have been taken into the process so we could get the process to work. It is always a team effort, and it takes more than ones who are just leading the effort. I know there are an immeasurable number of hours they have put in on this issue and I thank all of them for their hard work.
I look forward to continuing to work with my House colleagues, Congressman Womack, Congresswoman Speier, Congressman Conyers, and Congressman Welch, as they push forward to the House passage of the Marketplace Fairness Act.
I also thank Senator Durbin for all of his energy on this bill, the perspective he was able to bring to the bill and his tremendous ability to communicate the issues. I thank Senator Alexander. We were working on a much bigger bill until Senator Alexander lent some expertise to make this a much simpler one, one that is completely readable and only 11 pages.
I think that covers most of the objections. There will be some from the States that do not charge a sales tax at all because if their businesses exceed $1 million in on-line sales, then they will have to. If they sell into States that collect the sales tax, they would have to participate in the collection of that.
As we push forward with House passage of the Marketplace Fairness Act and as we finish in the Senate tonight, as I am confident we will, I thank all who are participating in it, particularly the people of courage.
I yield the floor.
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