WASHINGTON — Brick-and-mortar retailers have urged federal lawmakers to give states the ability to collect sales taxes from online retailers. For those retailers that operate physical stores, the issue is seen as a matter of fairness.

Brick-and-mortar retailers have urged federal lawmakers to give states the ability to collect sales taxes from online retailers. For those retailers that operate physical stores, the issue is seen as a matter of fairness.

"The National Retail Federation has long supported sales tax fairness legislation, and we are encouraged by the momentum that is building toward a solution," NRF senior vice president David French said late last month. “As retailing evolves and Internet sales become a more prominent portion of total retail sales, it is critical that Congress support pro-small business reform of a broken sales and use tax collection system.

French’s comments were submitted in writing to the House Judiciary Committee in connection with a hearing on H.R. 3179, also known as the Marketplace Equity Act, which was authored by representatives Steve Womack (R., Ark.) and Jackie Speier (D., Calif.). The bill was filed in response to the 1992 Supreme Court decision in Quill v. North Dakota. In that case the court ruled that states can only require out-of-state retailers to collect sales taxes if they have a physical presence in the state.

"Allowing states to capture remote sales tax revenue equitably regardless of a retailer’s business model is a meaningful pro-small business reform of a broken collection system," French said. "This competitive disadvantage must be cured with congressional action."

The Retail Industry Leaders Association also spoke out in favor of the legislation at the hearing, arguing that both represented important steps toward creating a level playing field for all types of retailers.

"Retailers compete on price every single day," argued RILA executive vice president for public affairs Katherine Lugar. "And it’s time for the government to stop meddling in the free market by giving one segment of the retail industry special treatment over everyone else. Regardless of whether a sale happens in a store or online, the state sales tax collected should be the same. Government shouldn’t be picking winners and losers by giving online companies an artificial competitive advantage."

RILA and its retail members are encouraged that legislation will be passed this year, Lugar noted, pointing out that Womack and Speier have built strong bipartisan support for their bill, which has 47 members of the House signed on as cosponsors. The bill also has support from Republican governors across the country, RILA says.

"Retailers have been waiting a long time, and this hearing is the next big step forward toward restoring a true free market," Lugar said. "We remain committed on behalf of America’s retailers to working with lawmakers in both parties, in the House and the Senate, to push for action this year that levels the playing field once and for all."

To support its position, RILA marshaled more than a dozen executives from state-based retail associations to press legislators to pass so-called e-fairness legislation this year.

"We’re here to remind lawmakers of the thousands of Main Street businesses in Indiana that are imploring Congress to end special treatment for online-only retailers," said Indiana Retail Council president Grant Mona­han. "With thousands of local jobs at stake, we need Congress to act by the end of the year."

Retailers say Internet retailers now enjoy an automatic 5% to 10% price advantage over stores required to collect sales taxes.