2 More States OK Streamlined Sales Tax Bills

Bills that comply with the Streamlined Sales and Use Tax Agreement have passed the West Virginia and Utah legislatures and likely will be signed quickly into law.

Gov. Bob Wise is expected to sign West Virginia's bill today, and Gov. Mike Leavitt could OK Utah's bill next week. West Virginia and Utah would join South Dakota as the first states to approve legislation complying with the sales tax agreement. South Dakota Gov. Mike Rounds signed that state's bill into law March 6.

Indiana, Kentucky, Kansas, Maryland, Montana, Nebraska, North Dakota, Oklahoma, Kansas and Washington have introduced similar legislation.

The agreement was approved in November by members of the Streamlined Sales Tax Project, which consists of about 40 states. Though the agreement lets municipalities set individual tax rates, it sets a framework that, the states say, would make collection of sales tax manageable. It applies to all sales channels: retail, telephone, Internet or mail order.

States see it as a way around the 1992 “Quill” Supreme Court decision, which ruled that only sellers with a physical presence, or “nexus,” in the same state as the buyer are required to collect taxes because the thousands of tax jurisdictions nationwide are too burdensome to track.

The sales tax project aims to get at least 10 states representing 20 percent of the population of all states with a sales tax to comply with the agreement. The project then would ask remote sellers who are not collecting taxes in states where they lack a physical presence to volunteer to collect taxes and push Congress to craft legislation on the collection of remote-sales taxes that would not violate the 1992 Supreme Court decision.

Scott Peterson, project co-chair, said states most likely would contact Congress next year about introducing legislation.

“We need to have a system up and operating, which probably won't happen until next year,” he said. “We are not so sure Congress would approve a system that is not up and operating.”

But Peterson said there are members of Congress “who are ready to introduce legislation when they think we are ready.” Two senators who expressed interest, he said, are Byron Dorgan, D-ND, and Michael Enzi, R-WY.

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