Alaska Rep. Don Young explains efforts to tax the Internet through the Streamlined Sales and Use Tax Agreement that 24 states have signed in to.
" Thank you for contacting me regarding H.R. 684, the Marketplace Fairness Act of 2013. I appreciate you taking the time to share your concerns with me.
Under the Commerce Clause of the Constitution, a state may not impose tax collection responsibilities on an out-of-state seller that does not have a physical presence in the state. This interpretation has allowed many online businesses to sell to customers in various states without having to collect and pay owed sales taxes unless the business has an actual building in the states. In fact, to combat this many states have established laws that require the customer to pay the sales tax to their home state, but the rate of compliance is extremely low.
The inherent difficulties in collecting state-specific sales taxes led many state tax administrators to form a working group tasked with finding a uniform way to collect sales taxes among the states. In 2002, the working group produced the Streamlined Sales and Use Tax Agreement (SSUTA), which was adopted by 24 states so far. Alaska has not adopted the SSUTA and does not impose a sales tax on its businesses or purchasers.
On February 14, 2013, Representative Steve Womack (R-AZ) introduced H.R. 684 to allow states to impose sales tax collection duties on remote sellers if the state has adopted the SSUTA or similar state legislation. An exemption would be provided to sellers with online gross sales less than $1 million per year. This means that if H.R. 684 were law, any state which adopted the SSUTA would have to collect sales taxes from its constituents, who purchased products online from an out-of-state vendor, and remit those taxes to the vendor's home state. Opponents of this legislation argue that the legislation would force online retailers to become tax collectors for the 46 states who collect sales taxes. Furthermore, they argue that enacting H.R. 684 into law could mean online businesses facing multiple out-of-state audits if these businesses fail to collect the proper amount of taxes. As more and more purchases are made over the Internet and states experience more and more fiscal troubles, state governments are looking for new ways to collect taxes from sales generated online. Alaska does not impose a state sales tax and has not adopted the SSUTA. Therefore, it does not appear that H.R. 684 would affect Alaskans even if it were adopted. However, if Alaska were to adopt the SSUTA, the idea that H.R. 684 could force Alaskan online vendors to become tax collectors for 46 states is troublesome. For that reason, I remain highly skeptical of H.R. 684 in its current form."
Under the Commerce Clause of the Constitution, a state may not impose tax collection responsibilities on an out-of-state seller that does not have a physical presence in the state. This interpretation has allowed many online businesses to sell to customers in various states without having to collect and pay owed sales taxes unless the business has an actual building in the states. In fact, to combat this many states have established laws that require the customer to pay the sales tax to their home state, but the rate of compliance is extremely low.
The inherent difficulties in collecting state-specific sales taxes led many state tax administrators to form a working group tasked with finding a uniform way to collect sales taxes among the states. In 2002, the working group produced the Streamlined Sales and Use Tax Agreement (SSUTA), which was adopted by 24 states so far. Alaska has not adopted the SSUTA and does not impose a sales tax on its businesses or purchasers.
On February 14, 2013, Representative Steve Womack (R-AZ) introduced H.R. 684 to allow states to impose sales tax collection duties on remote sellers if the state has adopted the SSUTA or similar state legislation. An exemption would be provided to sellers with online gross sales less than $1 million per year. This means that if H.R. 684 were law, any state which adopted the SSUTA would have to collect sales taxes from its constituents, who purchased products online from an out-of-state vendor, and remit those taxes to the vendor's home state. Opponents of this legislation argue that the legislation would force online retailers to become tax collectors for the 46 states who collect sales taxes. Furthermore, they argue that enacting H.R. 684 into law could mean online businesses facing multiple out-of-state audits if these businesses fail to collect the proper amount of taxes. As more and more purchases are made over the Internet and states experience more and more fiscal troubles, state governments are looking for new ways to collect taxes from sales generated online. Alaska does not impose a state sales tax and has not adopted the SSUTA. Therefore, it does not appear that H.R. 684 would affect Alaskans even if it were adopted. However, if Alaska were to adopt the SSUTA, the idea that H.R. 684 could force Alaskan online vendors to become tax collectors for 46 states is troublesome. For that reason, I remain highly skeptical of H.R. 684 in its current form."
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