Customs reauthorization bill delayed until next year

The Customs reauthorization, which passed in the House of Representatives last week, has stalled in the Senate due to a dispute over a last-minute rider regarding how to tax Internet sales that has stirred up strong opposition.    Industry hopes for quickly finalizing a Customs reauthorization bill in the last days of the current session of Congress have evaporated.
   The House of Representatives last week passed the measure, which institutionalizes many internal reforms and sets policy direction for the agency. Many Capitol Hill observers assumed the Senate would vote this week, before adjourning for the holiday recess, and send the bill to President Obama to be signed into law.
   The Customs reauthorization is now caught up in a dispute over how to tax Internet sales.
   Senators such as Richard Durbin, D-Ill., have mounted opposition to the bill after the Permanent Internet Tax Freedom Act was added as a rider during House-Senate negotiations on a compromise version. The PITFA would permanently ban states from taxing Internet access or placing multiple taxes on e-commerce transactions. Original legislation that temporarily banned Internet access taxes was first enacted in 1998 and extended five times since then.
   Durbin and others are pushing legislation instead that would give states the option to require out-of-state businesses, such as those selling online or through catalogs, to collect and use taxes already owed under state law, as is done with brick-and-mortar businesses. They say the law is necessary to level the playing field because physical stores, especially small businesses, are at a competitive disadvantage when people can buy similar products from online retailers without having to pay tax.
   The Retail Leaders Industry Association has expressed opposition to the Customs reauthorization, which it favors on the merits of the bill itself, because of the last-minute insertion of PIFTA in the conference report. The organization says PIFTA should only be passed in concert with separate legislation closing the online sales tax loophole, which gives online-only retailers special tax treatment over stores with a physical presence.
   “The conference committee’s decision to include PITFA in unrelated trade legislation represents a remarkable departure from the regular order commitments House and Senate leaders have made and that many members have so exalted. Further, the move robs Main Street retailers, the backbone of local economies, of the logical companion to bipartisan legislation to level the sales tax playing field,” RILA wrote in a letter to lawmakers.
   “As local retailers work to survive back home this holiday season, some members of Congress are going to great lengths to continue preferential treatment for a select few online retailers,” Jennifer Safavian, RILA’s executive vice president for government affairs, said in a statement. “We are urging all members of Congress who support local businesses to oppose this 11th hour deal, and support a plan to pass both PITFA and legislation that gives all retailers a fair shot in the free market.”
   The Senate is expected to take up the Custom reauthorization bill after it returns to work on Jan. 11, 2016.
   Key provisions in the the Customs reauthorization bill formalize Customs’ new Centers for Excellence and Expertise aimed at streamlining duty payments, create a new executive tier for the offices of Field Operations and Trade, and demonstrate Congress’ commitment to completing the Automated Commercial Environment.