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Marketplace Fairness Act Dead This Year, but Chaffetz Promises New Bill

Posted on December 11, 2014 by Jennifer DePaul

This article first appeared in the December 11, 2014 edition of Tax Notes Today.


Although the Marketplace Fairness Act (MFA) is effectively dead for this year, U.S. Rep. Jason Chaffetz, R-Utah, plans to introduce a separate bill to replace the MFA after the New Year that he says addresses concerns from conservative members of Congress.

Chaffetz on December 10 told members of the National Conference of State Legislatures at a meeting on Capitol Hill that he will introduce the Remote Transaction Parity Act, a bill similar to the MFA (S. 743 and H.R. 684), which would authorize states to require remote sellers to collect taxes.

Chaffetz spoke to several hundred state lawmakers who were on Capitol Hill as part of the NCSL's coordinated effort to lobby Congress about the MFA or similar e-fairness legislation.

Chaffetz said his draft of the bill will not be introduced until he gets the nod from House Speaker John A. Boehner, R-Ohio, to proceed and that until that point, he will seek a list of cosponsors.

"I think it will be very palatable to both sides of the aisle," Chaffetz told Tax Analysts following the meeting. "It really clarifies a number of things that people thought were wrong with the MFA. It just makes it a better bill."

Chaffetz has been working with Rep. Steve Womack, R-Ark., and other cosponsors of the original MFA legislation, which passed the Senate in 2013.

Womack described how he and 25 other House Republicans met with Boehner last week to discuss the MFA. He said he opened the discussion with the speaker by saying that Congress's inaction on the issue enables people to "knowingly and willfully break the law, and that has never, never been a conservative value."

Speaking to Tax Analysts after the NCSL event, Womack said the meeting with Boehner and others was "the same talkers and the same rhetoric that we've been hearing for almost two years."

During the meeting he said he asked House Judiciary Committee Chair Bob Goodlatte, R-Va., how much more time he needs on a bill. Womack said he understands that Goodlatte has several ideas he would like to bring up about hybrid origin sourcing but that Goodlatte said he hasn't been successful in getting the stakeholders to the table.

Womack said he took issue with Goodlatte's claim and that he would get stakeholders only if Goodlatte would provide a date and time to mark up the bill so that it could be brought to the House floor for a vote.

"How many more retail obituaries are we going to have to read before we, Congress, recognize pursuant to what the Supreme Court said in 1992 that we are the only institution that can intercede on the issue and issued us an engraved invitation to fix the problem," Womack asked.

Womack, like other supporters of the MFA, had hoped to get the bill passed in the lame-duck session. But as the congressional session draws to a close in the next few days without its inclusion in an omnibus spending bill to fund the federal government, it's highly unlikely to move this year.

On December 9 Womack asked House Majority Leader Kevin McCarthy, R-Calif., to make the new bill a priority for his leadership team early next year. Womack said McCarthy gave him a favorable response and signaled that he understands the underlying issue and thinks it needs to be addressed. Womack also said he received assurances from Boehner that the leadership will vet the issue in the regular order committee process.

"I am encouraged by the discussion," Womack said. "I believe that this issue will be resolved once and for all in relatively short order."

As Chaffetz discussed his new bill, he said he was seeking support from the NCSL and others to help gain momentum for it for next year.

Neal Osten of the NCSL told Tax Analysts that as part of lobbying effort on December 10, it hopes the e-fairness issue is settled in the first three to four months of the new year. Osten, who has seen a draft of Chaffetz's bill, called it "a good and fair bill because it really does more for small businesses."

"If any small business had a concern about MFA, this will take away their concerns," Osten said. There is language in the draft bill that would reduce the burden of audits on small businesses, Osten said.

The draft also has language on order provisions, registration, and certification of registered software providers, Osten said.

"Chaffetz's bill strengthens what was in the MFA bill that passed the Senate," Osten said. "The new bill that Congressman Chaffetz has will indeed respond to the principles raised by Chairman Goodlatte and should respond to all of the concerns the House Republican leadership has raised about the MFA bill."