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US States Pursue Interstate Agreements On Net Sales Tax

by Leroy Baker,, Washington

26 November 2001

Congress's recent decision to extend the moratorium on Internet-related taxes for another two years has prompted the Streamlined Sales Tax Project (SSTP) group into stepping-up its campaign to urge the government to introduce a level playing field across all US states in the treatment of remote e-sales across state lines.

The group of officials representing 33 states who wish to harmonise their sales tax systems has called a meeting for next week in Salt Lake City to draw up a strategy. Charles Collins, from North Carolina's sales tax division of the Revenue Department and co-chairman of the SSTP, stated that the moratorium extension 'doesn't set us back' from the SSTP's aim of collecting the sales tax.

Frank Shafroth, director of state and federal relations for the National Governors' Association, has told reporters that state legislatures must now act quickly to harmonise laws and interstate agreements for tax collection before the new moratorium runs out in October 2003. 'There was a lot of pressure on Congress to do a five-year extension, now everyone knows this issue will have to be revisited in two years.'

The SSTP believes that providing the laws are simple and consistent across the states, Congress will eventually agree to collecting sales taxes across state lines.

The Multistate Tax Commission, a group of state governments that works with taxpayers to administer tax laws that apply to multistate and multinational enterprises, last month embarked on a new study to focus on the costs of collecting sales tax. The study's findings are crucial to the SSTP regarding the issue of compensation to vendors for collecting tax - in order to initiate a plan for compensation, the SSTP first needs to know something about the costs incurred by retailers, so that there is a basis for determining the rate at which to set compensation.

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