BOMA International has examined and issued its formal position on the thorny question of internet sales taxes. The adopted position asserts that “sales taxes are a local jurisdictional issue and that the federal government should not engage in any activity that preempts that authority.” The position was arrived at through the association’s Government Affairs Committee and approved by the Board of Governors.
Background: In 1998, Congress enacted legislation that imposed a 3-year moratorium on internet access taxes and on multiple or discriminatory taxes on electronic commerce. The act did not specifically prohibit an internet sales tax, but the effect, says BOMA, was that internet business could conduct tax-free transactions. More recently, the House passed legislation H.R. 3709 that continues the moratorium for another five years, resulting, states BOMA, in at least five more years of tax-free sales for internet retailers. The association suggests the strong likelihood that internet sales will be given permanent preferential treatment.
Because sales are moving from in-store to on-line, non-taxable retailers, states will soon face a sizable drop in revenue. The situation, asserts BOMA, creates two serious problems for building owners and managers. One, as the largest source of local property taxes, “our tax rates will surely increase.” And two, “our retail tenants will have a more difficult time sustaining profitability.” In short, BOMA contends that untaxed internet retailers would have a decided competitive advantage.
Based on a report from BOMA’s Potomac Currents
