The Sales Tax Buzz Top 10 Sales & Use Tax Legislative Developments of 2009

2009 was rife with legislative changes in terms of nexus, e-commerce taxation, sales tax holidays, and other key areas, so to help readers make a little sense of all of this activity, I put together the Sales Tax Buzz Top 10 Sales & Use Tax Legislative Developments of 2009 List, as well as a little commentary on each [note, as in all posts, that the opinions expressed herein are mine and not necessarily representative of Avalara – and note carefully the “not necessarily” language :- )  ]: 

1.  Developments concerning The Main Street Fairness Act (aka the Sales Tax Fairness and Simplification Act). Yep, I’m demonstrating a distinct bias for this legislation by listing it first. So deal with it. I’m just so into this Act that I held an e-roundtable on it, attended by Wal-Mart, J.C. Penney, and representatives from Tech & Government to chat about a U.S.-wide Internet sales tax system, as found here. I’ve been praying that it will be formally introduced into the House any day now . . . and then the Senate . . . but meantime I’m just following the lobbying efforts and readers comments across the Internet, pro and con.

2.  On a related note, I put together a compendium of Internet sales tax legislation – and proposed legislation – at the state level last March, as found here. This one is worth a click (if for no other reason than the really cute picture) but needs to be updated. Together, the #1, #2, and #3 items on today’s list have received in excess of the high 5 digits of unique hits – giving me reason to believe these issues are high on people’s lists of concerns re: sales & use tax legislation in 2009 (and most definitely as we round the bend to 2010). Amazon.com got frisky and threatened to cut off its affiliate programs in several states, as seen here and here, adding to the e-commerce drama in 2009.

3.  A compendium on digital download taxes at the state level, put together last March, as found here. I really need to go back and update this post (but I did add an update/separate post for WA State here in June). So many to mention from the original compendium . . . and so little space . . . but the point is that 2009 saw a plethora of developments at the state level in terms of the advent or expansion of taxing digital goods.

4.  New Hampshire’s Ch. 169 (S.B. 5), Laws 2009, signed into law July 9^th, aimed at protecting retailers from essentially becoming tax collectors for other states – it also keeps consumer information private. This one really gets my vote as Favorite Legislation of the Year, not to mention giving the Live Free or Die! state yet another gold star for coolness. The legislation is covered here.

5. Just the idea of a VAT in the U.S. to pay for health care reform . . . it got me thinking, here, but not too deeply. I think it could be a super cool idea, if legislated for and administered properly, but I’ve learned over the years not to engage in too much wishful thinking on it.

6.  Amnesty legislation got quite a bit of attention this year, but how much did it really help the states? Some more than others, and New Jersey did particularly well.

7.  Marijuana: Friend or Foe to State Lawmakers? I thought about this question all year, from the sales tax perspective of course, but only wrote about it twice (and updated one wildly popular post several times). Too bad I only focused on lobbying efforts in California, because there have been just so many interesting developments elsewhere (including, but not limited to, Colorado). Maybe I’ll have to pay greater respect in 2010 to the notion that sales tax on marijuana could help plug holes in state budgets. And maybe I’ll have to do some fieldwork.   :- )

8.  Sin Taxes: There were proposals and sometimes passages of sin tax legislation throughout 2009 (ciggies, sodas, alcohol . . . ) and one that really stood out – particularly in terms of the Power of the People/Revolutionaries – was in Kentucky. When Kentucky enacted a 6% tax on all alcohol back in February 2009, bourbon distillers joined in solidarity to protest on the front steps of the state Capitol, pouring spirits in the streets. And when the numbers were published for April 2008 vs. April 2009 sales, the first full month that the alcohol tax was in effect, it appeared that the new tax had a profound effect on state revenues from the sale and consumption of spirits, to the tune of driving them down by 55% (down from $781,940 to $350,239). I was deeply impressed by Kentucky pride, protest, and how clearly increased sales (“sin”) taxes impacted upon consumption. It’s usually tough to find such direct results flowing from legislation.

9.  North Carolina got a little weird in August and September when its laws were modified to enable the general sales tax rate to be increased to anywhere from 7.75% to 8.25%, depending on the county in question, but notice wasn’t given until a week after the fact and the DOR didn’t even have time to create new electronic tax forms reflecting the new rates. Read here for more headaches and potential catastrophes that this temporary tax increase created for countless merchants.

10.  The Cell Tax Fairness Act of 2009: The U.S. House Judiciary Subcommittee on Commercial and Administrative Law met June 9 to hear expert testimony supporting the Cell Tax Fairness Act of 2009 (H.R. 1521, which can be read in its entirety here), a bill that aims to restrict states and local jurisdictions from imposing a new discriminatory tax on cell phone services, providers, or property for a period of five years. And companion legislation, S.1192 (read in its entirety here), was introduced June 4 in the U.S. Senate. 

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