New Bill Would Allow States to Collect Sales Tax from Online, Catalog Purchases
On November 9, 2011, Senator Enzi (R-WY) and 9 co-sponsors1 introduced a bipartisan bill that would give states the option to collect the sales taxes they are owed under current law from out-of-state businesses, rather than rely on consumers to pay those taxes to the states -- the method of tax collection to which they are now restricted (S. 1832, the Marketplace Fairness Act).
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2 Options for States to Collect Sales Taxes from Online, Catalog Purchases
According to Senator Enzi’s press release, under the current tax loophole, while brick-and-mortar retailers collect sales taxes from customers who make purchases in their stores, many online and catalog retailers do not collect the same taxes. Under the Marketplace Fairness Act, states would have the option to collect sales and use tax revenues from out-of-state sellers through a new, simplified tax system. The legislation would streamline the country’s more than 7,500 diverse sales tax jurisdictions and provide two options by which states could begin collecting sales taxes from online and catalog purchases:
- SSUTA members. States that voluntarily become Member States of the Streamlined Sales and Use Tax Agreement (SSUTA) would be able to require remote sellers to collect and remit sales and use taxes after 90 days. A total of 24 states have permanently changed their tax laws and implemented the requirements of the agreement. The agreement would help harmonize states sales and use tax rules, bring uniformity to the definitions of items in the sales tax base, reduce the paperwork burden on retailers, and incorporate new technology to modernize administrative procedures.
- Non SSUTA members. States that do not wish to become members of SSUTA would be allowed to collect the taxes only if they adopt certain minimum simplification requirements and provide sellers with additional notices on the collection requirements.
1Senators Alexander (R-TN), Blunt (R-MO), Boozman (R-AR), Corker (R-TN), Durbin (D-IL), Johnson (D-SD), Pryor (D-AR), Reed (D-RI), and Whitehouse (D-RI).
Press release with link to section-by-section summary and National Review Online op-ed available here.