In what could very well become historic times in the sales tax arena, I wanted to call attention to a draft federal bill that is set for consideration this Friday, March 20, in a final set of congressional meetings – namely the Sales Tax Fairness and Simplification Act (H.R. 3396 and S. 34), as can be viewed here.
Friday’s work on the draft bill will predominately focus on issues created by the telecommunications and cable portions, as they are rather unclear and, more importantly, at highest risk of being opposed by localities. If not reconciled, these portions could put the bill at serious risk of being de-railed. If the telecommunications and locals can come to an agreement, however, the language could be modified accordingly. If they cannot, the telecom/cable portions of the draft bill could very well be removed to ensure a higher probability of the bill’s passage.
Current thinking indicates that the bill will be submitted the week of March 23 – which is just next week!
On the same day that the bill is to be submitted, it is anticipated that Dr. William Fox (economics professor and director of the Center for Business and Economic Research at the University of Tennessee, as well as former visiting scholar for the Federal Reserve Bank of Kansas City and past president of the National Tax Association) will issue a press release on his findings on the economic impact on states based on lost tax revenue from untaxed e-commerce sales.
So what are the chances that this bill will pass?
Well, let’s see: The timing couldn’t be any better, with the widespread state funding shortfalls and the change in Congress, this bill has a better chance of gaining traction than at any other time in recent history. And with the addition of Wisconsin and other states introducing legislation to conform to SST, there is a pretty good chance the momentum has, at long last, turned in favor of this legislation.
If another President was in office, or if the House was controlled by Republicans, the chances would, of course, be much lower. But the fact remains that the states are desperate for funds to maintain services and most of the country is in a democratic mode, meaning services are more important than the size of government right now.
And with the federal government and President Obama in bailout mode, coupled with the President’s popularity this early in his term, this legislation just makes sense for the states (and, looked at one way, can be seen as not increasing taxes directly). The other side of the story is, of course, that anything can happen. Real threats to the bill’s passage include local governments and the possibility that businesses do not have access to multistate tax information, as well as the occurrence of a national disaster that would put this issue on the back burner.
Instead of debating the small seller exemption (those companies that will not be required to collect taxes across state lines), it has been removed, making the legislation more likely to pass. The responsibility will now be transferred to the SST Governing Board, which will put the threshold as low as it possibly can, possibly as low as a $100K – $500K range.
Update March 19th: Preliminary discussions on the telecom piece are looking to be included, but may be changed if compromise is reached on Friday. The thinking is that, at this point, the locals want this bill too much to fight to have it removed. The bill will most likely be submitted on Tuesday, Wednesday, or Thursday of next week, or by Tuesday, March 31st, at the latest.
Update April 16th: CNET News reports, “If a little-known but influential alliance of state politicians, large retailers, and tax collectors have their way, the days of tax-free Internet shopping may be nearly over,” with the bill being ready to be introduced in Congress as soon as this upcoming Monday, April 20th.
To read support for the bill from the Jewelers Association of America, please click here.
To read Orlando Sentinel’s editorial, supporting the bill, please click here.
Filed under: Legislation, SST Tagged: | Amazon Tax, Dr. William Fox, H.R. 3396, Main Street Fairness Act, National Tax Association, President Obama, S. 34, sales tax, Sales Tax Fairness and Simplification Act, SST, state budgets, Taxability
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