By: Gina Luke, assistant director, Governmental Relations Division
Out-of-state online and catalog companies that sell pet medicine, products or equipment can have a built-in advantage of as much as 10 percent over neighborhood veterinary clinics simply because they are not collecting legally owed state sales taxes. Now, the AVMA and many other businesses across the country have joined together to continue their support for federal legislation that will level the playing field for all businesses.
A bipartisan group of U.S. senators renewed their push to fix this unfair situation when they introduced the Marketplace Fairness Act of 2015 (S. 698), on March 10. The legislation gives states the option to require out-of-state businesses, such as those selling over the Internet or through catalogs, to collect sales and use taxes already owed under state law the same way local businesses, such as veterinary clinics, do.
The bill also helps states and municipalities collect tax revenue that they are owed to help pay for basic services, such as fire and police departments and public schools, at a time when more purchases are being made online. The portion of retail sales made over the Internet has grown over the past decade, from about 2.4 percent of total sales in 2005 to almost 7 percent at the end of last year, according to the U.S. Census Bureau. Customers may not realize that they still owe sales taxes on their online purchases, especially since it is not collected by the retailer at the time of sale, and states are losing out on the additional tax revenue people are supposed to remit when they file their taxes each year.
The AVMA supported similar legislation last Congress that the U.S. Senate passed by a vote of 69-27 on May 6, 2013. The measure stalled in the House of Representatives and unfortunately died at the end of last Congress, despite avid support from a number of groups.
While the AVMA and others are optimistic about the bill’s prospects this session, it will take sustained advocacy by interested parties to build upon existing support in the U.S. Senate and to gain traction in the U.S. House of Representatives.