Yesterday the House Judiciary Subcommittee on Regulatory Reform, Commercial and Antitrust Law held a hearing on state nexus and taxation issues. Although the point of the hearing was not to discuss the Marketplace Fairness Act (MFA) specifically, tax collection in particular was a frequent topic of discussion amongst all participants – both Members and witnesses. Not surprisingly, participants sympathetic to big retail and money hungry states continued to call for passage of the MFA. However, others in attendance rightfully pointed out that the MFA is poor policy that will hurt small businesses in a variety of ways.

The hearing did serve as a great opportunity for new members of the subcommittee to be educated on the practical problems of a destination-based tax collection approach, like the MFA and a draft bill currently being written by Congressman Jason Chaffetz (R-UT). Although Congressman Chaffetz (who was not present at the hearing) continues to argue that his draft bill is not associated with the MFA, the Ranking Member of the subcommittee stated that the Chaffetz bill is just a “rewrite” of the MFA, while the Chair of the Multistate Tax Commission admitted that Congressman Chaffetz’s bill is “very similar” to the MFA. Judiciary Chairman Bob Goodlatte (R-VA) attended the hearing to discuss his hybrid-origin based bill and emphasized the dangers of allowing states to tax and regulate beyond their borders. 

While next steps are unclear, we expect Chairman Goodlatte and Congressman Chaffetz to continue to work on their respective Internet sales tax bills.  eBay will continue to oppose any destination-based approach to internet sales tax collection that will be harmful to small retailers.