INTERNET SALES TAX BILL IS INTRODUCED IN HOUSE
Reps. Istook (R-Okla.) and Delahunt (D-Mass.) introduced legislation to authorize states-developed Streamlined Sales & Use Tax Agreement (SSUTA) to allow sales taxation on Internet retailers. They're likely to be joined by Sens. Enzi (R-Wyo.) and Dorgan (D-N.D.), who plan to push similar bill soon in Senate.
Sign up for a free preview to unlock the rest of this article
Timely, relevant coverage of court proceedings and agency rulings involving tariffs, classification, valuation, origin and antidumping and countervailing duties. Each day, Trade Law Daily subscribers receive a daily headline email, in-depth PDF edition and access to all relevant documents via our trade law source document library and website.
While stressing importance of legislation for states with strapped budgets, Istook and Delahunt acknowledged it would be difficult sell to many members. “This is not a tax bill,” Delahunt said. “Let’s be clear and unequivocal. It will not raise taxes.” But they conceded it was likely to be perceived that way by many members. “The prospects of this legislation are very good,” Istook said, “but we're still in the education process.”
Istook said if Congress didn’t allow states to assess sales and use tax on remote sales, they would look to Congress for funding. “Congress will be besieged with requests to make up the difference,” Istook said. He said General Accounting Office (GAO) report had estimated states would lose $20 billion per year. Delahunt said issue was of fairness and of states’ rights. “This should be a litmus test for states’ rights,” he said. Istook said fair enforcement of tax rights was one way states could avoid raising taxes.
Bill would give states authority to enforce SSUTA on out-of- state retailers. U.S. Supreme Court 1992 Quill decision forbids states from collecting sales taxes on out-of-state retailers because it found such taxes to be too complex for out-of-state retailers to comply. However, court did acknowledge consumers’ responsibility for paying sales taxes and implied Congress could grant states such authority if they developed better taxing system.
For more than 3 years, 34 states have worked to develop common definitions and standards for sales taxes. SSUTA has been ratified by 20 states with 31.7% of U.S. population -- Ark., Ia., Ind., Kan., Ky., Minn., Neb., Nev., N.C., N.D., Ohio, Okla., S.D., Tenn., Tex., Utah, Vt., Wash., W.Va. and Wyo. Bill would require that at least 10 states adopt SSUTA, threshold that Istook said states already had met. “The states have done their part. Now Congress must act,” Delahunt and Istook said in Sept. 22 “Dear Colleague” letter.
Legislation also would create national clearinghouse that would help retailers process sales tax payments. There is support for bill among several retailers, including Staples, which subsequently purchased Quill, company that originally challenged out-of-state tax. “As the Supreme Court envisioned, there would be a time when its decision no longer would apply. That time has come,” Staples said in letter to Enzi and Dorgan, urging Senate action.