Internet tax and Coast Guard fees on the horizon

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The playing field might finally be leveling when it comes to taxes on Internet sales, while a renewal fee for documented boats is being sought by the Coast Guard for the first time.

The U.S. Senate voted 74-20 on Monday to close debate (called cloture) on the Marketplace Fairness Act. The bill now moves to the floor for debate and a vote that could take place as early as today.

The Marketplace Fairness Act is legislation that has been sought by a broad base of the nation’s brick-and-mortar retailers and is a high priority of the Marine Retailers Association of the Americas, according to MRAA Washington lobbyist Larry Innis.

The bill (S. 743) is sponsored by Sen. Mike Enzi, R-Wyo. It would hand state governments upwards of $11 billion annually as it grants all states the power to collect taxes from out-of-state vendors selling goods to their residents via the Internet. Cash-strapped states are eager to get the revenue, so they’re lovin’ it. So are retailers.

The idea has been proposed for years. Congress hasn’t moved. But it’s never been closer to reality than it is now with a filibuster-proof Senate majority apparently locked in. Those that are opposed claim it’s a new tax, but technically it’s not. Current law calls for shoppers to keep track of their online purchases and pay the applicable taxes in their annual tax filings. But few people do it. It’s also notable that the bill does not require states to collect the money, but gives them authority to do it.

Online retailers have been able to undercut the prices of their non-Internet competitors since online shopping became popular. Shoppers aren’t dumb. They’ve learned they can browse products in, say, the accessory section of a dealership, then with a click on their smartphones, make the purchase from an Internet retailer and save an average of 5 to 7 percent in sales tax.

The Marketplace Fairness Act won't apply to businesses generating less than $1 million in out-of-state revenue. Still, it is common-sense legislation that is overdue in recognizing the real-world marketplace of today. A similar bill by Rep. Steve Womack, R-Ark., is in the House. If you want to see this become law, email your two Senators and your Congressman now.

Remember the 1990 Coast Guard User Fee? No, it’s not back, but there is a current proposal by the Coast Guard to institute a new annual fee of $26 for the renewal of documentation certificates on recreational boats. While there is an extensive list of applicable charges pertaining to issuing new certificates of documentation, heretofore there has been no charge for the required annual renewal. The proposed fee will, of course, only apply to boats that are federally documented and would be in addition to any state registration fees.

Boats must be at least five net tons to be eligible and documentation is often required by lenders financing a boat purchase. That’s because documentation provides a first preferred ships mortgage that has superior advantages for lenders in the event of a default situation.

Whether there should suddenly be any charge for renewal notwithstanding, this proposal brings up an interesting question: Why does a documentation have to be renewed every year if nothing material has changed?

If the proposed fee is to cover labor costs involved in mailing notices and processing renewals, why not just reduce those costs through operating efficiencies and by making renewals every three or five years? The documentation process is already loaded with a substantial schedule of fees depending on the specific service requested. But this proposed renewal fee appears to be simply a general revenue raiser and needs either genuine justification or immediate reconsideration.

Click here before May 3 if you want to share your thoughts with the Coast Guard on this proposal.

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