June 1, 2007
State Lawmakers Applaud Introduction of Federal Sales Tax Simplification Bill
Proposal would grant states authority to collect sales taxes on catalogue, internet sales
WASHINGTON, D.C. - Many states whose revenues are struggling could get some welcome relief if Congress enacts sales tax collection legislation introduced last week. A bill introduced by U.S. Senator Mike Enzi would grant some states the authority to require retailers to collect sales taxes on catalogue, internet and other remote sales.
The Sales Tax Fairness and Simplification Act (S. 34) allows states that have complied with the Streamlined Sales and Use Tax Agreement to require remote sellers to collect sales taxes. To date, the voluntary program has netted more than $75 million in new revenues for state and local governments which would have gone uncollected without the agreement. Currently, more than 1,000 retailers in 21 states are voluntarily collecting and remitting sales taxes on remote sales.
“State lawmakers are pleased by the introduction of the Sales Tax Fairness and Simplification Act,” said NCSL President and Texas Senator Leticia Van de Putte. “Once enacted, this legislation will not only provide states with more resources to dedicate to education, public safety or tax relief but will also make life a whole lot easier for our small businesses.”
Studies show that states are losing billions of dollars each year – at least $15.5 billion in 2003 – because they are unable to collect sales taxes on catalogue, internet and remote sales. Several rulings from the U.S. Supreme Court bar states from requiring out-of-state retailers to collect sales taxes on their behalf. The court said requiring a business to comply with more than 7,500 different sales tax codes was an undue burden to interstate commerce. However, the court did leave open the door for Congress to grant collection authority to the states.
The Streamlined Sales and Use Tax Agreement is a multistate endeavor to simplify and modernize state sales tax administration in an effort to overturn the Supreme Court’s claim that sales tax codes are too onerous. The agreement is designed to provide simplicity and uniformity for out-of-state retailers. In exchange for voluntarily collecting remote sales taxes, retailers would be compensated for the costs of collecting taxes and released from liability resulting from sales tax collection accounting errors.
Senator Van de Putte says this bill should be a ‘no-brainer’ for her federal counterparts.
“Senator Enzi’s bill provides billions of dollars worth of federal fiscal relief to the states, many of whom are struggling to balance their budget, without taking a dime from the federal treasury,” she said. “We’re not asking for the ability to impose new taxes. We only want the authority to collect taxes that are already on the books.”
NCSL is the bipartisan organization that serves the legislators and staffs of the states, commonwealths and territories. It provides research, technical assistance and opportunities for policymakers to exchange ideas on the most pressing state issues and is an effective and respected advocate for the interests of the states in the American federal system.
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