This site uses cookies. By continuing to browse the site you are agreeing to our use of cookies.
Daily Tax Report: State provides authoritative coverage of state and local tax developments across the 50 U.S. states and the District of Columbia, tracking legislative and regulatory updates,...
By Che Odom
A federal solution to the problem that remote retailers face when confronted by multiple states demanding sales and use taxes may not come anytime soon.
Bills that might address the controversy are tied up with legislation regarding the taxation of workers who cross state boundaries to access their jobs, a staff adviser to a GOP House member told Bloomberg Tax Nov. 8. One won’t be put forward for a vote unless they all are, he said.
Tax reform, infrastructure, and other legislative priorities of Republican leaders and the White House, as well as the ongoing Russia probe, leave little room for much else, said the staffer, who wished to remain anonymous because he isn’t authorized to speak about ongoing tax negotiations.
“Whenever you link legislation together and have different constituencies involved, that makes getting something through more difficult,” Jamie Yesnowitz, principal and state and local tax practice and National Tax Office leader at Grant Thornton LLP, said Nov. 8 at the American Institute of CPAs Fall Tax Division Meeting in Washington. The mobile workforce bill seems to have the best chance of success, and it’s unrelated to the other bills, he said.
The Mobile Workforce State Income Tax Simplification Act of 2017 (H.R. 1393) may have a chance of getting passed next year, but the odds aren’t great, the staffer said. The proposed federal legislation, which passed the House by voice vote June 20, would prevent states from taking income tax from people who work 30 days or less within their borders. However, the bill faces strong opposition from New York lawmakers, particularly in the Senate. The measure remains in the Senate Finance Committee, along with a Senate companion bill ( S. 540) with identical language that had a June hearing before the Small Business and Entrepreneurship Committee.
Likewise, states, tax practitioners, and sellers shouldn’t expect Congress to take action on the issue of states’ taxing authority over remote retailers, the staff advisor said. “I’d be surprised” if Congress got to that issue, he said.
Several congressional bills have been designed to address the U.S. Supreme Court’s 1992 decision in Quill Corp. v. North Dakota, which precludes states from imposing sales and use tax collection obligations on vendors without a physical presence in-state.
Lawmakers presented in late April the Marketplace Fairness Act of 2017 (S.976) and the Remote Transactions Parity Act of 2017 (H.R. 2193), in the Senate and House respectively, both allowing states to mandate out-of-state sellers and online vendors collect tax on in-state sales. Neither has advanced further, and versions of both have been introduced in prior years.
The No Regulation Without Representation Act of 2017 (NRRA) (H.R. 2887), a competing measure that would codify Quill, is also pending in Congress. A House Judiciary subcommittee heard testimony on the NRRA during a July hearing, but there has been no floor vote.
As more states require businesses to report remote sales in their states, small companies, in particular, are finding compliance difficult, Cathie Stanton, partner and national leader of state and local tax services at Cherry Bekaert LLP, said Nov. 8 during the AICPA meeting.
“This can be very burdensome to comply for small businesses,” particularly those doing sales in multiple states, she said.
In July, Washington state Gov. Jay Inslee (D) signed into law E.H.B. 2163. The statute requires that beginning Jan. 1, 2018, remote sellers, marketplace facilitators such as Amazon.com Inc., and referrers with gross receipts sourced to Washington of at least $10,000 must collect and remit sales or use tax.
The penalty for non-compliance is $20,000 per year, Stanton said. That is huge for a small company that may not even be aware that it is doing business in Washington, she said.
This is an area in which the federal government should take action, Stanton said. “We don’t want to push smaller sellers out of business for just reporting requirements,” she said.
Rather than require remote sellers to collect tax on their marketplace transactions, an increasing number of states have proposed shifting the tax collection burden to Amazon, eBay Inc., Etsy Inc., and other companies providing the online platforms. Minnesota and Washington this year were the first two states to enact laws requiring marketplace providers to collect tax on third-party marketplace transactions.
To contact the reporter on this story: Che Odom in Washington at codom@bna.com
To contact the editor responsible for this story: Cheryl Saenz at csaenz@bna.com
Copyright © 2017 Tax Management Inc. All Rights Reserved.
All Bloomberg BNA treatises are available on standing order, which ensures you will always receive the most current edition of the book or supplement of the title you have ordered from Bloomberg BNA’s book division. As soon as a new supplement or edition is published (usually annually) for a title you’ve previously purchased and requested to be placed on standing order, we’ll ship it to you to review for 30 days without any obligation. During this period, you can either (a) honor the invoice and receive a 5% discount (in addition to any other discounts you may qualify for) off the then-current price of the update, plus shipping and handling or (b) return the book(s), in which case, your invoice will be cancelled upon receipt of the book(s). Call us for a prepaid UPS label for your return. It’s as simple and easy as that. Most importantly, standing orders mean you will never have to worry about the timeliness of the information you’re relying on. And, you may discontinue standing orders at any time by contacting us at 1.800.960.1220 or by sending an email to books@bna.com.
Put me on standing order at a 5% discount off list price of all future updates, in addition to any other discounts I may quality for. (Returnable within 30 days.)
Notify me when updates are available (No standing order will be created).
This Bloomberg BNA report is available on standing order, which ensures you will all receive the latest edition. This report is updated annually and we will send you the latest edition once it has been published. By signing up for standing order you will never have to worry about the timeliness of the information you need. And, you may discontinue standing orders at any time by contacting us at 1.800.372.1033, option 5, or by sending us an email to research@bna.com.
Put me on standing order
Notify me when new releases are available (no standing order will be created)