Leading CFOs and Treasurers Seek Internet Tax Moratorium Extension to 2005

by Mike Godfrey, Tax-news.com, Washington

16 May 2001

The Association for Financial Professionals (AFP), a Maryland-based community of more than 14,000 individuals representing a broad spectrum of financial disciplines, recently asked Congress to extend the current moratorium on new Internet sales taxes for an additional four years, and encouraged reform of the nation's complex and inconsistent sales tax structure.

In letters to the Congressional sponsors of Internet tax legislation, the AFP said: 'We generally support the concepts in the legislation that you have introduced and commend you for taking leadership roles on this issue.' The AFP delivered its comment letters at the beginning of May to Senators Byron L. Dorgan (D-ND) and Ron Wyden (D-OR), and Christopher Cox (R-CA).

While the AFP said it supports the use of a sales tax to support local jurisdictions, it said the current method of collection places an unfair burden on businesses that sell in multiple states. The letters stated: 'We recognize that sales tax is a critical source of revenue for state and local governments. However, requiring businesses that sell in multiple states to comply with the existing complex and inconsistent sales tax structure places an unfair and excessive burden on these businesses. Reform of this structure is long overdue.'

The AFP also said that although it encourages the promotion of e-commerce, similar sales transactions should be treated equally regardless of how those sales take place: 'We strongly support passage of laws or regulations that encourage innovation and efficiency,' the letters stated. 'However, we also support the principle of tax equity, and believe that it would be inequitable to exempt electronic commerce from taxes levied on sales via other channels.'

Thus the AFP has called upon Congress to extend the current moratorium to October 21, 2005, to encourage state and local governments to simplify and unify their complex sales tax structures, to allow states that have simplified, uniform sales tax structures to impose sales taxes on purchases by their residents, regardless of the location of the seller or whether the purchase was made at a store, by telephone, by mail or by the Internet, and to ensure that compliance with the simplified sales tax structure does not increase the burden placed on merchants.

AFP's members' organisations are responsible for paying and collecting substantial amounts of tax on sales through the Internet and more traditional channels. They therefore have an active interest and sizable stake in the outcome of the debate regarding the taxation of Internet sales.

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