NCSL Press Release: NCSL Clears Up Misconceptions About Streamlined Sales Tax

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September 30, 2003

NCSL Clears Up Misconceptions About Streamlined Sales Tax

Colorado governor to raise questions at a House subcommittee hearing

WASHINGTON, D.C. - In anticipation of a Congressional hearing tomorrow, the National Conference of State Legislatures issued a series of answers to nine concerns that Colorado Governor Bill Owens has with the Streamlined Sales and Use Tax Agreement.

The following answers are in response to questions raised in Governor Owens’ white paper, “Nine Problems with Taxing the Internet.”

Is the Streamlined Sales and Use Tax Agreement revenue neutral?

Yes, if a state so decides. Each state legislatures has the authority or the sovereignty to make their participation with the Streamlined Sales and Use Tax Agreement revenue neutral.

Will the Agreement simplify tax compliance for America’s merchants as its proponets suggest?

Yes, even if the states did nothing more than adopt the proposed administrative changes contained in the Agreement, all vendors would enjoy reduced compliance complexity. Under the Agreement, all merchants would be held harmless for any miscalculations.

Does the Agreement pose threats to consumer privacy?

No, the Agreement provides that a certified service provider “shall perform its tax calculation, remittance and reporting functions without retaining the personally identifiable information of consumers.”

Will the Agreement require your state and its local jurisdictions to forfeit sovereignty over tax policy in your state?

No, compliance to the Agreement is always optional for a state. The decision to comply with the provisions of the Agreement can only be made by each state legislature and governor - and they can withdraw at any time.

Is the Agreement consistent with the Constitutional doctrine of federalism?

Yes, the Agreement is voluntary for states and for merchants. This is not a mandatory compact or violation of the Commerce Clause of the Constitution.

Will the Agreement reduce tax policy competition between states?

No, the state legislature in each state that complies with the Agreement will still decide what is taxed, who is exempt and at what rate it wants to tax transactions.

Will the Agreement impede the success of the technology revolution?

No, the Agreement provides for technology that will not add any additional forms for the online buyer to complete. The information the buyer provides for the delivery or payment of the product is sufficient to determine the correct sales tax.

Will the Agreement hurt certain citizens more than others?

No, all buyers in a state that complies with the Agreement will pay the same sales tax on a transaction regardless if it occurs in a brick-and-mortar store or online.

Will the Agreement really promote equity between brick-and-mortar and online retailers?

Yes, all transactions regardless of the way they are purchased will be treated the same under the Agreement and all retailers will receive reasonable and adequate compensation to cover the costs of collection.

Governor Owens and others are scheduled to testify before the U.S. House Judiciary Subcommittee on Commercial and Administrative Law tomorrow, October 1, 2003. The hearing is scheduled for 2 p.m. in room 2141 of the Rayburn House Office Building. For more detailed answers to Governor Owens’ questions, please visit http://www.ncsl.org/standcomm/sctech/tax_misconceptions.htm.

NCSL is a bipartisan organization serving the legislators and legislative staff of the states, commonwealths and territories. Its mission is to improve the quality and effectiveness of state legislatures, foster interstate communication and provide the states a strong, cohesive voice in the federal system.

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