SENATE FIGHT LOOMS AGAIN OVER E-COMMERCE SALES TAXES
House Judiciary Committee Wed. is expected to approve bill (HR-49) by Rep. Cox (R-Cal.) that would make moratorium on discriminatory Internet taxes and online access taxes permanent. At same time, Senate Commerce Committee will hold a hearing on subject (WID July 14 p4), all in anticipation of moratorium’s expiration Nov 1. As in 1998 and 2001, however, many expect Senate, which due to congressional apportionment is more heavily influenced by rural interests, to press for a linkage between moratorium and growing effort among states to simplify sales tax collection.
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Rep. Delahunt (D-Mass.) is one member who bemoans loss of tax revenue states suffer from e-commerce; under U.S. Supreme Court Quill decision, states cannot require e-commerce sites to collect sales tax unless company has a direct nexus in tax collector’s jurisdiction. Delahunt might seek to amend HR-49 Wed. to add a Sense of the Congress that Capitol Hill should aid states in simplifying sales taxes, but he has said he will not oppose renewing moratorium, or even making it permanent. That isn’t case in Senate, where Sens. Dorgan (D-N.D.), Enzi (R-Wyo.) and other members of both parties will seek to link the 2 issues.
Testifying before Senate Commerce Committee Wed. will be Tex. Deputy Comptroller Billy Hamilton. Tex. has no income tax, meaning it relies heavily on sales tax for its revenue. Hamilton has stated publicly in past that Tex. probably loses $350 million in tax revenue annually due to Quill. U. of Tenn. study found that in 2001 states lost $13.3 billion in potential tax revenue, a number they projected to increase to $45.2 billion in 2006. Also on panel is Amazon.com Vp-Global Public Policy Paul Misener. Amazon.com now collects sales tax online for land-based partners Target and Toys R Us, but still declines to do so for its own sales because of difficulty of complying with some 7,400 state and local jurisdictions, some of which have rates varying within zip codes. Other scheduled witnesses are AOL Vice Chmn. Joseph Ripp and Sprint Vp-State and Local Tax Mark Beshears.
Streamlined Sales Tax Project (SSTP) is continuing to recruit states, attempting to ensure at least 10 states with 20% of sales-taxing jurisdictions in order to approach Congress for a law certifying simplification and nullifying Quill (WID July 2 p1). Most of states participating in SSTP are small, although Cal. has taken an observer position. Colo. Gov. Bill Owens (R) is one of few state executives opposed to SSTP, calling it a “cartel”.
House Judiciary Commercial and Administrative Law Subcommittee Chmn. Cannon (R-Utah) said after his subcommittee approved HR-49 that states have some distance to cover before Congress can certify SSTP: “We are not ready to do that yet.” He told Delahunt at markup that he would schedule a hearing on SSTP, but he has yet to do that.
Senate is considering 2 bills, both referred to Senate Commerce. One is HR-52 by Sen. Wyden (D-Ore.), author with Cox of first 2 moratorium bills. HR-52 has 2 Democratic co-sponsors. Other bill is HR-150 by Sen. Allen (R-Va.), which has 7 co- sponsors, 6 of them Republican. Both would make moratorium permanent; in past 2 attempts with this legislation, compromises were reached where sales tax collection proponents permitted passage but only for temporary moratoria. Wyden told us recently he didn’t care whether it was his bill or Allen’s that passed, as long as one did. Commerce Committee Chmn. McCain (R-Ariz.) in 106th Congress introduced a bill to make moratorium permanent. HR-49, meanwhile, has 124 co-sponsors, and no member at subcommittee markup said they would push to make moratorium temporary rather than permanent.