Kansas House Approves Online Sales Tax Bill

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 Christopher Brown

Online and out-of-state sellers would be required to report untaxed sales to the Kansas Department of Revenue and notify taxpayers of their tax-payment obligations under a bill that passed the House yesterday.

Lawmakers approved HB 2235 by a 104-21 vote, and it was quickly referred to the Senate’s Assessment and Taxation Committee.

The committee was scheduled today to hear an informational Department of Revenue official briefing on the issue of remote sales tax collection . But little time remains in the session for action on the issue.

The Legislature is still wrestling with several big-ticket items, including a larger tax-package that could include rollback of a controversial tax exemption for pass-through income, a rewrite of the school funding formula and the challenge of filling a $350 million budget hole.

Long Overdue

Erik Sartorius, a spokesman for the League of Kansas Municipalities, which has lobbied for HB 2235 as well as another bill on remotes sales taxation, HB 2400, which would require remote sellers to collect and remit Kansas sales tax, told Bloomberg BNA April 5 that he still thinks the bill passed by the House will become law this year.

“There have been differences of approach on this issue, but we’re confident from out talks with lawmakers in both chambers that there’s a lot of support for the idea that it’s time for Kansas to lend its voice along with others to getting this fixed,” he said. “It’s long overdue, and whether it’s getting Congress to take action, or getting the Supreme Court to review the matter, or a bill like this, it’s time for Kansas to act.”

Sartorius said that Kansas lawmakers appeared more inclined to impose a notify-and-report requirement on sellers than to require them directly to collect the sales tax.

“The bill requiring collection would almost certainly end up in litigation, and they don’t want that,” he said. “A notify-and-report approach is much safer that way.”

Economic nexus laws expanding authority over online sales taxation in South Dakota, Alabama and Tennessee already have launched litigation. About 15 states have considered such bills this legislative session.

A handful have considered reporting and notification bills like HB 2235, with Alabama the only to enact one thus far. Colorado’s law just survived a years-long legal battle in December, when the U.S. Supreme Court declined to review the issue. However, a bill to repeal the law is before the legislature.

Veto Session

The final day of the Kansas regular session is Friday. Lawmakers are then scheduled to return for a veto session in May, at which unfinished business from the regular session also may be considered.

“I doubt they get this done before the end of day Friday,” Sartorius said. “But I like to think that they may act on it in May.”

To contact the reporter on this story: Christopher Brown in St. Louis at ChrisBrown@bna.com

To contact the editor responsible for this story: Ryan C. Tuck at rtuck@bna.com

For More Information

Text of HB 2235 is at http://src.bna.com/nzn

Copyright © 2017 Tax Management Inc. All Rights Reserved.

Request Daily Tax Report: State