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 Tripp Baltz
A state legislator said the recently introduced No Regulation Without Representation Act of 2017 (H.R. 2887) was “devious at its core” as an unprecedented preemption of state sovereignty.
“This is a direct assault on the very premise of a representative democracy, a complex, constitutional republic where citizens vote for the individuals who represent them,” Utah state Sen. Curtis Bramble (R), former president of the National Conference of State Legislatures, said during a June 15 meeting of the NCSL’s Executive Committee Task Force on State and Local Taxation in Jackson Hole, Wyo.
Bramble said the bill—introduced June 12 by Rep. Jim Sensenbrenner (R-Wis.) and co-sponsored by House Judiciary Committee Chair Robert W. Goodlatte (R-Va.)—would eliminate “the people’s representatives at the state level, who set the tax policy each of us as citizens is subject to. It says that voice doesn’t matter.”
The 2017 NRRA follows the introduction of two measures adopting an alternative approach. Lawmakers in late April presented the Marketplace Fairness Act of 2017 and the Remote Transactions Parity Act of 2017, 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.
Sensenbrenner filed a bill ( H.R. 5893) in July 2016, proposing to codify 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. The 2017 proposed legislation is broader in scope.
The bill would provide that “to the extent otherwise permissible under Federal law, a State may tax or regulate a person’s activity in interstate commerce only when such person is physically present in the State during the period in which the tax or regulation is imposed.”
The 2017 NRRA would prohibit states from telling out-of-state businesses how to make or dispose of their products, and imposing income tax or sales tax collection burdens on remote businesses.
Bramble said the proposed legislation is “ironic” given Goodlatte’s support for his draft Online Sales Simplification Act, which proposes a hybrid “origin-based” system that generally would base the taxation of remote purchases according to the seller’s location, but set the tax rate according to the consumer’s location. The bill has never been formally introduced in the House.
Bramble wondered whether the introduction of H.R. 2887 is a concession by Goodlatte and Sensenbrenner that “they are basically driven by a pay-to-play culture, a culture where the only representation they are interested in is for the people who are paying.”
During an NCSL session on state taxation of remote sales, Joe Rinzel, a partner with Align Public Strategies and formerly with the Retail Industry Leaders Association, said Goodlatte’s support for the bill is “proof that this is not a legislator who is supportive of finding a solution to this problem.”
H.R. 2887 would impact “everything that impacts interstate commerce, which is pretty much everything,” said Max Behlke, NCSL director of budget and tax.
“You could make an argument this would preempt any law in your state. States would pretty much have to ask Congress to do anything. It’s the biggest violation of state sovereignty that’s ever been introduced in Congress. I’m not exaggerating. This bill is that bad, and NCSL is strong in its opposition to it.”
The NCSL sent a letter to the House June 13 detailing its opposition.
Behlke said the issue of taxation of remote sales was a big one in the states this year, with almost 30 states considering bills during their 2017 sessions. Lawsuits to challenge Quill are advancing in South Dakota, Alabama, and Tennessee.
“As the world becomes more digital, for sales taxes to be a viable revenue stream for states, many are saying we have to get this resolved,” he said. “Otherwise, states may say, ‘why do we even have’” a sales tax.
To contact the reporter on this story: Tripp Baltz in Jackson Hole, Wyo., at email@example.com
To contact the editor responsible for this story: Ryan C. Tuck at firstname.lastname@example.org
The NCSL agenda is at http://www.ncsl.org/documents/taskforces/Jackson_Hole_SALT_Agenda.pdf.
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 email@example.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 firstname.lastname@example.org.
Put me on standing order
Notify me when new releases are available (no standing order will be created)