Lobbyists, businesses continue battle over Web sales tax

Amazon has 25 people on its payroll pushing for passage of the Marketplace Fairness Act.

THE SEATTLE TIMESSeptember 12, 2013 

BIZ -CPT-INTERNET-SALESTAX SE

Peter Ollodart, owner of Puget Sound Instrument, says his Tacoma, Wash., electronics business won't survive if the Internet sales tax bill becomes law and he is required to collect local taxes on out-of-state sales.

MARK HARRISON — Seattle Times

When Peter Ollodart realized earlier this year that a bill in Congress to require sales taxes on all Internet purchases could wipe out his company's slim profits, the owner of Puget Sound Instrument flew to Washington, D.C., to persuade lawmakers to oppose it.

The three-day trip cost Ollodart more than $2,000, no small share of the $50,000 salary he draws as the firm's president.

What Ollodart didn't know is his annual pay equals what Amazon.com Inc. spends per month for one powerhouse lobbying firm to get that same legislation enacted.

Seattle-based Amazon late last year hired Patton Boggs, a marquee Washington, D.C., lobbying group, to join two other firms on retainer as well as Amazon's in-house lobbyists in hopes of getting the Marketplace Fairness Act passed.

The bill cleared the Senate in May, 69-27. But the measure has stalled in the House Judiciary Committee, whose chairman, Rep. Bob Goodlatte, R-Va., has expressed "serious concerns" about the Senate version.

Still, the end of tax-free shopping on the Internet could be near. That prospect has spawned a fierce duel of special interests.

Amazon, Wal-Mart, Best Buy and some brick-and-mortar retailers are whipping up votes in favor. Other types of small businesses, the conservative Heritage Foundation, and eBay Inc. are leading the opposition.

The battle involves more than just campaign cash and a bevy of lobbyists. Both camps have made aggressive use of newspapers' op-ed pages, social media, briefings for lawmakers and staff, and competing studies purporting to debunk the other side's "facts" about the act.

A coalition formed in February by Amazon, Sears and more than 200 other companies, for instance, produced a video testimonial by Goodlatte's clothier in Roanoke, Va., that the bill would help the family business by ending online sellers' sales tax advantage.

The same group, Marketplace Fairness Coalition, supplied supportive lawmakers leaving town on August break with recess kits containing "top-line message points" to talk up how the bill would promote free markets, create jobs and reduce the need to raise taxes.

Though Amazon is a big beneficiary of tax-free shopping, the Seattle company for more than a decade has insisted it supports uniform federal rules that would apply to all but the smallest retailers. Achieving that could free Amazon from litigious confrontations with the growing number of states coming after it for uncollected taxes.

The Marketplace Fairness Act would override a pair of early Internet-era rulings by the U.S. Supreme Court that have kept states from compelling online and catalog retailers to collect sales taxes on orders from states where they do not have stores or another other physical presence.

One sign of the bill's priority for Amazon in this Congress is the company's visibly stepped-up presence on Capitol Hill. The company has spent $1.7 million on lobbying so far this year, according to the Center for Responsive Politics, a nonprofit watchdog group in Washington, D.C.

San Jose, Calif.-based eBay, the bill's biggest foe, has spent $1.2 million. It wants small businesses with less than $10 million in sales to be exempt.

Amazon is on pace to surpass the record $2.5 million it spent in 2012. Before 2006, its lobbying expenses never topped $1 million.

In the nine months ending in June, Amazon has paid Patton Boggs $500,000 for the services of nine lobbyists, according to federal lobbying reports. Among them are former Senate Majority Leader Trent Lott, R-Miss., and former Sen. John Breaux, D-La.

All but two Patton Boggs lobbyists on the Amazon account are former federal employees.

Amazon has lobbyists at two other firms working wholly or in part on the sales tax bill. One, Elizabeth Frazee of TwinLogic Strategies, is Goodlatte's former legislative director.

Amazon is among at least 135 companies and groups that have lobbied for or against the bill so far this year, according to data compiled by the Center for Responsive Politics.

The bill was Amazon's top concern, accounting for nearly as many visits to lawmakers as electronic privacy, skilled-worker visas and all other issues combined.

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