Momentum for a federal solution to online sales tax collection continues to grow with more than 20 remote sales tax bills under consideration in statehouses across the country.
Last week, the Arkansas Senate Revenue and Taxation Committee, with no opposition, endorsed a bill that would require online retailers to collect sales tax and submit it to the state.
Such efforts will likely lead to Congressional action, U.S. Representative Steve Womack said.
“It will pass the House if it ever comes to a vote,” Rep. Womack told Arkansas Business last week. “I think there’s much more support for it than before…It’s beginning to hurt a lot of these municipal offices and county offices. Our state governors are now weighing in. They know this is a problem that’s going to get worse and not better."
Although Amazon, the largest online retailer, is currently collecting sales tax in the majority of states, the problem of sales tax fairness remains.
“Amazon is just one of many large online sellers,” said Jennifer Platt, ICSC vice president for Federal Operations. “As long as the misperception that online shopping is tax free is allowed to persist, states and local governments are going to lose out on much-needed revenue for important services like education, police and fire protection and infrastructure improvements. The patchwork of state legislation is not the best way to solve the problem but it is all we can do until Congress acts.”
There are now five states that have a sales tax where Amazon isn't collecting or reporting sales tax: Arkansas, Hawaii, Idaho, Maine and New Mexico. And nearly all of those are currently considering some type of online sales tax legislation or have signaled that they will shortly.
- Arkansas – A bill approved by the House on a 54-46 vote this week would require Amazon and other out-of-state companies without a physical presence in Arkansas to provide a list to finance officials of purchases made by state residents. The measure now heads to the Senate, which a day earlier approved another measure that would require Amazon and similar companies to begin collecting state sales tax.
- Hawaii – H.B. 398 and S.B. 161 would both require retailers or vendors that aren’t located in the state and aren’t required to pay or collect general excise or use tax for sales to submit an annual report to the Department of Taxation and to notify purchasers of their use tax liabilities. The house version passed the House Committee on Economic Development & Business on Feb. 1, and the Senate version has been referred to committee since its Jan. 20 introduction.
- Idaho – Rep. Lance Clow has announced plans to introduce an online sales tax bill to the legislature this session.
- New Mexico – HB 202, a proposal to collect gross receipts tax from major internet retailers selling merchandise that generates more than $100,000, has garnered bipartisan support. The measure House Business and Industry Committee advanced the bill, which now goes to the House Taxation and Revenue Committee.