In an effort to advance their remote sales tax bills, Sens. Michael Enzi, R-WY, and Byron Dorgan, D-ND, sent a letter to the Senate Finance Committee chairman and ranking minority member requesting a hearing on the bills.
The bills, S. 2152 and S. 2153, were introduced Dec. 20 and would permit states that become voluntary members of the Streamlined Sales and Use Tax Agreement to require remote sellers to collect and remit sales and use tax. The bills were referred to the Finance Committee.
Created by the Streamlined Sales Tax Project, the SSUTA took effect Oct. 1, letting remote sellers selling to people or businesses in member states voluntarily collect taxes on sales that occur via the Internet, telephone or catalog. For the agreement to take effect, 10 states representing 20 percent of the population of states with sales taxes needed to pass legislation. So far, 19 states have done this.
Enzi and Dorgan are longtime supporters of mandatory sales tax collection. In 2003, they introduced one bill. Enzi's bill this year is identical to the 2003 bill and includes a provision releasing companies with sales of less than $5 million a year from collecting the tax. Dorgan's bill also has a small business provision, but it asks the Small Business Administration to initiate a rulemaking as to the dollar amount for the exemption.
“We … think this legislative matter deserves the immediate attention of Congress,” the senators said in their March 21 letter to chairman Chuck Grassley, R-IA, and ranking Democrat Max Baucus of Montana. “The continued growth in Internet sales is resulting in fewer tax dollars being collected on traditional purchases that pay for even the most basic government services.”
The Direct Marketing Association objects to the bills. It said that if the legislation became law, the protection of the Quill decision would end. This refers to the 1992 U.S. Supreme Court ruling Quill v. North Dakota, which held that it would be too burdensome on businesses to collect and remit sales taxes on behalf of the 7,600 state and local taxing jurisdictions nationwide. The DMA also said the SSUTA hasn't simplified the tax process.
The failure of either bill to address reducing the number of tax jurisdictions is a key flaw, the DMA said, and remains a critical obstacle to a workable streamlined sales tax program. The bills also leave leeway in determining what types of goods are taxable, the DMA said. Tennis shoes are considered nontaxable clothing in some states while in others are taxed as athletic equipment.
The National Retail Federation, however, said yesterday that the bills would help end the disparity in tax rules between traditional retail stores and remote merchants.
Melissa Campanelli covers postal news, CRM and database marketing for DM News and DMNews.com. To keep up with the latest developments in these areas, subscribe to our daily and weekly e-mail newsletters by visiting www.dmnews.com/newsletters