By Stephen K. Cooper, Washington Staff Writer
With an eye on the increasing e-commerce activity over the Christmas holidays, lawmakers in the House of Representatives are considering methods to regulate the reporting and payment of sales taxes from consumers who make online purchases.
At a December 6, 2007, hearing of the House Judiciary Subcommittee on Commercial and Administrative Law, Chairman Linda Sanchez (D-Calif.) said states are collecting fewer tax revenues as consumers go online to purchase items without paying the appropriate state sales taxes.
Lawmakers and industry experts discussed the Sales Tax Fairness and Simplification Act of 2007, a bill offered by Reps. William Delahunt (D-Mass.) and Ray LaHood (R-Ill.) that would give Congress' stamp of approval to the Streamlined Sales and Use Tax Agreement (SSUTA). Some states are using SSUTA to simplify their sales tax systems in light of a recent Supreme Court ruling that faulted states for having tax systems that are too complex for consumers to understand. The House bill includes 19 minimum simplification requirements that states must follow to receive authorization to require remote and online sellers to collect sales taxes.
"States currently have limited legal authority to require remote sellers to collect sales taxes on items they sell. Instead, the burden is on consumers to remit use taxes, which are the equivalent of sales taxes, to their state of residence," Sanchez explained. "State and local governments have voiced their concerns that that increasing online sales and the resulting loss in collection of sales taxes are affecting an ever larger portion of their revenues.
According to Steven Rauschenberger, who spoke on behalf of the National Conference of State Legislatures, many states are in danger of losing their revenue base due to tax-free electronic commerce and a shift to the service economy away from personal consumption of taxable goods. States are concerned about the future viability of the sales tax and the ability of state governments to fund essential services such as education, homeland security and public safety, he said.
He said swift passage of the online sales tax bill is Congress' opportunity "to ensure that the simplified system that the states have developed for the seamless collection of transactional taxes in the new economy is not impeded by those who merely are trying to avoid paying legally imposed taxes."
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