Capital Hill has entered state terrain in an effort to settle the decade-old heated battle between states and online retailers over the collection of sales taxes on online purchases. Depending on your viewpoint, this is either government gone amuck or action that is way overdue.
Legislation known as the Main Street Fairness Act was reintroduced in the U.S. Senate that would require Internet-only retailers to add sales taxes to customers’ bills, just like brick-and-mortar competitors. Each member state under the Streamlined Sales and Use Tax Agreement would be authorized to require all qualifying sellers to collect and remit sales and use taxes with respect to remote sales across the country. It also would require state-approved Streamlined Sales and Use Tax Agreements to meet a lengthy list of simplification requirements to ease administrative burdens for sellers; and exempt small businesses from collecting sales taxes. The bill would compensate retailers for the startup administrative costs associated with collecting sales taxes; and treat all retailers equally regarding sales tax collection.
The bill aims to address a 1992 U.S. Supreme Court decision that requires physical presence in a customer’s state for the collection of sales taxes from mail-order activity. Taxpayers are currently required to report sales that they have not paid tax on; in Colorado a Consumer Use Tax is due on those sales. However, few consumers actually file and pay. The bill would release consumers from existing remittance obligations. It would also help states and localities collect billions in taxes, helping to bridge budget gaps.
Support for a simplified state tax collection system is growing. Among the supporters of simplification are Amazon.com and Sears Roebuck & Co. Simplification is also supported by the National Governors’ Association, the National Conference on State Legislatures, the Governing Board of the Streamlined Sales and Use Tax Agreement, the National Retail Federation, the International Council of Shopping Centers, the Retail Industry Leaders Association, the National Association of Real Estate Investment Trusts, and the National Association of College Stores. Whether that support extends to the Main Street Fairness Act is yet to be seen.
For more information, see links to previous blogs on nexus issues, including:
Michigan Replaces its Controversial Tax Regime
States Take in More Revenue While Cities Take in Less
Nexus Issues Take on More Prominence for Businesses
Or contact Meredith Thiess at 720-227-0064 or mtheiss@taxops.com.
