Sales Tax Board Engaging White House on Digital Tax Issue

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By Ryan Prete

The Streamlined Sales Tax Governing Board Inc. is working with the Trump Administration to garner support for legislation establishing a national framework for digital sales taxation, according to a board member.

Randi Reid, a lobbyist for the SSTGB and principal at Kountoupes Denham Carr & Reid, a Washington-based lobbying firm, said the board is working to “educate” President Donald Trump’s Administration about the values of federal remote sales tax legislation.

“The governing board is pursuing a two-pronged legislative strategy this year. We are focused not only on House and Senate legislative efforts as we have been for years, but we are also focused on the Trump Administration and how we are engaging with them and how that engagement will eventually affect what is happening on Capitol Hill,” Reid said during a Dec. 8 SSTGB conference call. “We are continuing to work with them to further educate them about e-fairness policy.”

During a July SSTGB meeting, board members met with key staff members of Trump’s National Economic Council “to discuss the importance of finding a federal legislative solution to the remote sales tax collection issue,” Reid said.

“We informed them at that time that there has been significant state legislative and legal activity, and it would continue to increase as remote e-sales transactions continue to grow,” he said. “Further, we stressed that our organization is about simplification and uniformity, and that if this trend continues in the individual states, businesses are going to face a patchwork of state laws that they will have to maneuver state by state.”

Reid said board members have conducted over 80 meetings on Capitol Hill, mostly with House staff.

‘Nothing to Read Into’

The SSTGB has supported two bills pending in Congress—the Marketplace Fairness Act of 2017 (S.976) (MFA) and the Remote Transactions Parity Act of 2017 (H.R. 2193) (RTPA)that would expand states’ taxing authority over remote retailers. Both measures seek to undo Quill Corp. v. North Dakota, the 1992 Supreme Court ruling that prohibits states from imposing sales and use tax collection obligations on vendors without a physical presence in-state. Neither bill has moved to a floor vote.

John Buhl, media relations manager at the Tax Foundation, told Bloomberg Tax Dec. 8 that SSTGB’s engagement with the White House doesn’t mean the administration will adopt a stance on the issue of digital sales taxation.

“I’m sure that any time a new administration goes into the White House or a new lawmaker joins Congress, state and local groups will reach out and offer to meet and discuss issues important to their constituents and members,” Buhl said. “This is probably just part of that regular process and nothing to read into one way or the other.”

White House Position?

During a July 26 hearing before the Senate Appropriations Subcommittee on Financial Services and General Government, Treasury Secretary Steven Mnuchin said that online sales taxation “is an issue that we’ve been looking at very carefully within the administration, and we expect to come out with a position shortly.”

“There’s an awful lot of money that’s not being collected that is due to them under a use tax, and this could be of very important means for states to fund infrastructure, which is critical,” Mnuchin told the appropriations subcommittee.

However, the White House hasn’t come out with a policy position on remote sales taxation. And Trump’s potential stance on online sales taxation is unclear from Mnuchin’s comments, which followed a July 24 tweet from Trump questioning whether e-commerce giant Amazon.com Inc. is running a “no-tax monopoly.”

As of April 1, the retail behemoth had agreed to collect and remit sales taxes in all 45 states with a sales tax and the District of Columbia. Amazon recently informed marketplace sellers on its platform that it will automatically collect and remit Washington state sales tax on third-party marketplace sales beginning Jan. 1—but the company hasn’t announced it will collect tax on third-party transactions in other states.

Supreme Court Case

Meanwhile, the U.S. Supreme Court will soon decide whether to accept South Dakota Attorney General Marty Jackley’s (R) request for review of a state Supreme Court ruling that found the state’s “economic nexus” law, S.B. 106 (codified as S.D. Codified Laws Chapter 10-64), unconstitutional under Quill Corp. v. North Dakota—the 1992 U.S. Supreme Court ruling that prohibits states from imposing sales and use tax collection obligations on vendors without a physical presence in-state. South Dakota crafted its law as a vehicle to undo Quill.

The online retailers in the case—Wayfair, Inc. Overstock.com, Inc. and Newegg, Inc.—filed a brief in opposition to South Dakota’s petition Dec. 7. As of Dec. 8, the Supreme Court docket showed that six friend-of-the-court briefs were filed in favor of the e-commerce companies.

To contact the reporter on this story: Ryan Prete in Washington at rprete@bloombergtax.com

To contact the editor responsible for this story: Cheryl Saenz at csanez@bloombergtax.com

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