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Overstock chairman has political missions in Washington DC and Utah

WASHINGTON (Reuters) – This year, Jonathan Johnson is a man with two political missions.

In his home state of Utah, the Inc chairman is preparing a 2016 bid to replace a popular governor.

In Washington DC, his online retailer has emerged as the only company to back both of two competing proposals in Congress for the best way to tax online sales.

How web purchases should be taxed has been a top policy priority for Overstock as U.S. states push to require Internet sellers to start collecting sales tax. Under present U.S. law, online shoppers are supposed to report purchases and pay taxes on them, but few do as the requirement is tough to enforce.

Overstock and other retailers have lobbied for the federal government to simplify the multitude of state laws, arguing they burden online sellers with compliance and litigation costs.

Johnson’s call for federal help on tax is in contrast with his personal campaign to oust Utah Governor Gary Herbert in next year’s elections.

A Republican who favors small government, Johnson says that as governor, he would curb Utah’s wasteful spending and its unnecessary reliance on the federal government, particularly for stewardship of two-thirds of the state’s lands.

But on the issue of Internet sales taxes, Johson notes that the Constitution expressly grants Congress the authority to regulate interstate commerce, and says if lawmakers set new rules, Overstock should be part of the negotiation.

“We’ve gone from not wanting a federal solution to realizing there’s a patchwork of laws that just makes it hard to do business,” he said in an interview, adding that if a bad bill passed, “it’s an existential risk to the company.”

The debate over sales taxes on online purchases has raged in Washington for two decades. The National Conference of State Legislatures estimated in 2012 that states lose some $23 billion every year from uncollected sales taxes.

Some states have passed their own laws, requiring online retailers to begin collecting sales and prompting a pushback from Inc, Overstock and others. Overstock has led or supported lawsuits against at least three states and tried to take its case against New York to the Supreme Court.


Overstock now supports rival legislative proposals from Utah’s own Representative Jason Chaffetz and from Virginia Representative, and Judiciary Committee chairman, Bob Goodlatte.

Broadly, Chaffetz wants web sellers to collect tax based on the buyer’s location; Goodlatte, based on the location of the seller.

To Overstock, both solutions satisfy the need for a simpler, uniform system. “We’re betting on two horses,” Johnson said. “Whichever horse wins, we think we win.”

Informally, Johnson even suggests a “third way” solution, perhaps marrying the two proposals to tax online purchases based on each state’s uniform tax rate, but collecting and remitting to the seller’s state.

Amazon, “bricks-and-mortar” stores like Wal-Mart Stores Inc and states back Chaffetz’s bill, saying it would eliminate the tangle of state laws and put online and physical stores on the same level.

    Online marketplaces like eBay Inc and Etsy Inc, online startups and conservative advocacy groups oppose it, worried about the burden of collecting taxes at different rates or facing audits from multiple states.

The prospects of Chaffetz’s bill or Goodlatte’s discussion draft in the current Congress are unclear.

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