State Tax Snapshot: Procedural Issues Are Likely Obstacle for Online Sales Tax Bills

With three proposals pending in Congress to grant states authority to collect sales tax from remote retailers, it seems that the prospect of enacting such a measure has never been better.

Naysayers point out that the bills will not be enacted because the public is likely to perceive the states’ expanded collection authority as a new tax.

But there is a different hurdle that can block these proposals’ enactment that has little to do with the merits of the provisions.

Most tax bills in Congress are introduced and then referred to the Joint Committee on Taxation. But the online sales tax proposals are taking a different route, notedErnst & Young LLP's Steven N.J. Wlodychak at Bloomberg BNA’s Advisory Board Roundtable at Georgetown Law Center.  The bills have been referred to the Judiciary Committee in the House and the Commerce Committee in the Senate.

Unlike the Joint Committee on Taxation, where House and Senate staff are accustomed to working with one another, there is a lack of similar relationships between the House Judiciary and Senate Commerce Committees, Wlodychak said.

“My friends with experience on Capitol Hill said even trying to get the connectivity of the staff in both the Senate and the House is an obstacle in and of itself. So, it's kind of fascinating to see that no matter what kind of development that you have here there are the administrative mechanics in the Congress to try and get this legislation passed,” he added.

The Bloomberg BNA Advisory Board Roundtable’s insights on sales tax nexus, will be included in a special report issued on Sept. 28.

 By Steven Roll

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