State Tax Snapshot: Prospects of Federal Bills Granting Authority to Collect from Remote Retailers


The states are on the verge of being granted the authority to collect sales tax from remote retailers, judging from a presentation from government and business stakeholders at the Federation of Tax Administrators annual meeting last week. Also, a poll on Bloomberg BNA's StateTax LinkedIn group shows unanimous agreement that Congress is likely to enact such legislation by the end of 2013.

But there has been a lack of action in Congress to support the notion that remote collection authority will be granted to the states in the near future.

In one session, panelist Joan Wagnon, executive vice president of FedTax and the former Secretary of Revenue for Kansas detailed what the states need to do to prepare for the resulting influx of remote retailers. The list includes contracting with certified service providers and adopting uniform standards for sharing data about rates and boundaries.  

Panelist Rich Prem, vice president of indirect taxes and tax reporting at Amazon.com, encouraged administrators to adopt solutions that will "scale" to handle upwards of 20,000 new sales tax registrants and to implement education initiatives aimed at remote retailers.

But none of the bills has advanced since being introduced. Those bills are:

  • The Main Street Fairness Act (H.R. 2701 and S. 1452), which was introduced in July 2011, would allow states that are members of the Streamlined Sales and Use Tax Agreement to impose a collection obligation on remote sellers.
  • The Marketplace Equity Act (H.R. 3179), introduced in October 2011, would allow states that met certain simplification requirements to impose collection requirements on remote vendors, regardless of whether the jurisdiction was a member of SSUTA or not.
  • The Marketplace Fairness Act (S. 1832), introduced in November 2011, would automatically allow SSUTA members to impose collection requirements on remote vendors. Nonparticipating states that conformed to specific requirements, such as a single point of collection and a single rate, would also be permitted to require remote vendors to collect tax.

All three measures have provisions for a "small-seller exception" that would exempt a remote vendor from collecting tax if sales fell below a certain threshold.

On a more optimistic note, something seems to be different this time. Amazon seems to be anticipating remote collection authority-it brokered a deal with California last year, which hinges upon it. Plus, never has there been so many federal measures regarding sales tax collection pending at the same time. Also, while the bills have not moved, the Senate Finance Committee held an April 25 hearing that addressed the need to reform the state tax treatment of electronic commerce.

By Steven Roll

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