J.C. Penney Urges Congress to Tax E-Tailers

A lawyer for the retail giant said such a tax would level the playing field with its online competitors.

An in-house attorney for J.C. Penney testified before a congressional committee Dec. 6 that e-tailers should be taxed to "level the playing field" with brick-and-mortar retailers who already have to pay such taxes.

"We are here to ask you to level the playing field between sellers that collect sales tax and those who cannot be required to collect the tax because they do business in the community on a virtual rather than physical basis," J.C. Penney Vice President and Associate General Counsel-Tax Wayne Zakrzewski said. "Many of our [online] competitors do not collect, which gives them a competitive advantage. This is not because they are innovative or provide incremental value to the consumer but because the states do not have the ability to require collection of a tax that is due from the consumer."

Zakrzewski testified before the House Judiciary Committee's Subcommittee on Commercial and Administrative Law during a hearing on the Sales Tax Fairness and Simplification Act of 2007.

The National Retail Federation, which has been lobbying for the act, said the legislation would require out-of-state "remote seller" merchants to collect sales tax on merchandise sold to residents of their states. Retailers would be compensated for the cost of sales tax collection and collection could be outsourced to certified service providers, the NRF said, adding that retailers with less than $5 million in annual gross remote sales would be exempted.

Retail Center Editor Evan Schuman can be reached at Evan.Schuman@ziffdavisenterprise.com.

Check out eWEEK.com's Retail Center for the latest news, views and analysis on technology's impact on retail.