Weekly Round-Up: The Outlook for a Federal Solution to the Online Sales Tax Dilemma


Under California's A.B. 155, a new state law that required online retailers to collect sales tax was repealed retroactively to the June 28 date of enactment. But that law (ABX 28) will go back into effect Sept. 15, 2012, if no federal solution is enacted by July. Steven D. Roll, Assistant Managing Editor, BNA State Tax, recently spoke to Annette Nellen, a tax professor with San Jose State University and a blogger at 21st Century Taxation, about the outlook for federal legislation being passed.

The Main Street Fairness Act (S. 1452/H.R. 2701) is not getting a lot of attention in Congress, according to Nellen. While there was a hearing in April on the business activity tax nexus issue, there has not been a hearing specifically on streamlined sales tax legislation since 2007, she explains. However, perhaps with the Amazon debate in the states heating up and the introduction of a modified approach to getting remote vendors to collect sales tax (H.R. 3179), it will get some attention, Nellen said.

If Amazon pursues federal legislation, it would likely be joined by some multichannel vendors that support the act, such as J.C. Penney, according to Nellen.


However, there has been greater attention this year in Congress on the business activity nexus issue (income and gross receipts taxes), including the House Judiciary Committee marking up the Business Activity Tax Simplification Act (H.R. 1439), Nellen said. Given that states are not fond of the BATSA bill, but are fond of the Main Street Fairness bills, perhaps Congress will need to combine these bills to improve their chances, Nellen explains. “Given other items on the congressional agenda, though, I don't see any of these bills being a high priority.”


Full text of Roll’s interview with Nellen was published in this week’s issue of the Weekly State Tax Report, and covers, among other things, H.R. 3179, the Marketplace Equity Act, what Amazon may do if federal legislation is not passed, and the likelihood of Amazon striking deals with other states. The interview can be read in its entirety here.

In other developments,

The Tax Foundation releases a new report, authored by analyst Scott Drenkard that looks at the new taxes on soda and candy.

Morrison & Foerster releases their November 2011 issue of New York Tax Insights.

Michigan surpassing 48 states shows autos drive U.S. recovery, William Selway at Bloomberg Businessweek reports.

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