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House Releases Seven Basic Principles on Internet Sales Tax

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DALLAS, Sept. 20, 2013 /PRNewswire/ -- On September 19, 2013, the House Judiciary Committee released Seven Basic Principles on Remote Sales Tax. The purpose behind these principles is to guide discussion on the Marketplace Fairness Act and to encourage creative problem solving. Input received directly from taxpayers, industry and trade groups, and state and local government representatives played a key role in development of the seven principles, which are set out below:

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  • Tax Relief – Using the Internet should not create new or discriminatory taxes not faced in the offline world. Nor should any fresh precedent be created for other areas of interstate taxation by states.
  • Tech Neutrality – Brick and mortar, exclusively online, and brick and click businesses should all be on equal footing. The sales tax compliance burden on online Internet sellers should not be less, but neither should it be greater than that on similarly situated offline businesses.
  • No Regulation Without Representation – Those who would bear state taxation, regulation, and compliance burdens should have direct recourse to protest unfair, unwise, or discriminatory rates and enforcement.
  • Simplicity – Governments should not stifle businesses by shifting onerous compliance requirements onto them; laws should be so simple and compliance so inexpensive and reliable as to render a small business exemption unnecessary.
  • Tax Competition – Governments should be encouraged to compete with one another to keep tax rates low, and American businesses should not be disadvantaged vis-a-vis their foreign competitors.
  • States' Rights – States should be sovereign within their physical boundaries. In addition, the federal government should not mandate that states impose any sales tax compliance burdens.
  • Privacy Rights – Sensitive customer data must be protected.

Since its passage by the Senate and subsequent move to the House in May, the Marketplace Fairness Act has gained little if any traction. These principles may be just what "the doctor ordered" to shake things up a bit and spur debate. The full press release can be found on the House Judiciary Committee website.

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