Another Bill Proposed To Deal With E-Commerce Tax Revenue

Mike Godfrey, for LawAndTax-News.com, Washington

23 April 2009

The National Conference of State Legislators (NCSL) is sponsoring a bill in Congress following a report commissioned by the Streamlined Sales Tax Governing Board which estimates that, between now and 2012, States stand to lose up to USD52bn in uncollected sales taxes on e-commerce transactions.

This type of legislation has been tried in every Congress since 2003, but has never passed either chamber. The bill would enable States that have complied with the Streamlined Sales Tax (SST) initiative to require all online retailers to collect and remit sales tax from consumers who live in those States. The SST initiative, instigated in 2002, standardizes sales tax regulations to reduce the administrative burden on retailers. Until now, retailers have only had to collect and remit sales taxes on web sales in States in which they have a physical presence. This usually meant only one or a handful of States for e-commerce merchants.

How much online shoppers would pay if the proposed legislation becomes law is not clear, but any additional tax would hurt e-commerce by eliminating a perceived benefit of shopping online. The Streamlined Sales Tax Project “is streamlined in name only,” says Jerry Cerasale, senior vice president for government affairs at the Direct Marketing Association, which opposes online sales tax. “If States were serious in their efforts to simplify sales tax collections for remote sellers who have no presence in a State, there would be only one tax rate per State, one nationwide audit, one nationwide set of definitions and one nationwide definition of exemptions.”

Neil Osten of the NCSL says the bill will provide compensation for the cost of complying with the sales tax legislation.

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