Congress just might move to tax that next item you buy on the Internet, but a University of Nebraska law professor says it’s a tax that should have been collected all along.
Sales, whether in person or online, are subject to sales tax. A federal law, though, prevents states from requiring online retailers to collect sales taxes. A bill working its way through Congress would return that power to the states.
University of Nebraska law professor Adam Thimmesch says online retailers resist, because they worry about the myriad of state and local taxes charged on sales, even though the measure before Congress tries to simplify that.
“But notwithstanding those simplifications, there still could be 50 different variations, 50 different tax collectors knocking on your door saying that you’ve collected sales tax incorrectly,” Thimmesch tells the Jack and Dave in the Morning on Nebraska Radio Network affiliate KLIN.
Thimmesch estimates there are 10,000 sales tax jurisdictions in the United States, from state to county to city to local jurisdictions.
The Senate approved the measure on a 69-to-27 vote, including both senators from Nebraska. The House is said to be less receptive to the bill.
Both Sen. Mike Johanns and Sen. Deb Fischer cast the vote as a matter of fairness. Indeed, the measure is called the Marketplace Fairness Act.
“Brick and mortar stores are not only important for the strength of our economy; they play a pivotal role in defining the character of our communities,” Johanns said in a written statement released by his office. “It’s time we help level the playing field for local businesses on Main Street.
“This bill helps consumers comply with the current tax code by creating an easy, affordable way for online retailers across the country to manage already-owed sales tax, just as neighborhood shops already do with each sale,” Johanns stated.
Johanns is quick to point out the measure doesn’t impose a new tax, but only gives states the power to requiring online retailers to collect sales taxes. The law requires shoppers to remit the sales tax on items they buy, whether at the local store or through their laptop. Almost no one complies with the law. In a normal transaction, the retailers collect the sales tax on behalf of its shoppers and remit the tax to the state.
Fischer’s office also released a written statement.
“The Marketplace Fairness Act is not a new tax and it does not increase taxes – it simply levels the playing field. Rather than giving an edge to large Internet companies based in other states, the legislation treats large online sellers the same as Nebraska’s small town, Main Street merchants. Government should not be in the business of picking ‘winners’ and ‘losers.’ By giving online sellers a free pass from collecting state sales tax, the federal government is actively undermining millions of small business owners who invest in our communities and create jobs.”
Fischer points out that Nebraska, in 2003, joined 23 other states in adopting the Streamlined Sales and Use Tax Agreement (SSUTA), which ensures state tax laws and regulations are easily compliable. If enacted into law, the Marketplace Fairness Act would give Nebraska and all other states the option to require the collection and remittance of sales and use taxes from remote sellers, according to Fischer.
The bill has collected a wide array of supporters, including the National Governors Association, the Nebraska Retail Federation, the American Farm Bureau and the National Association of Realtors.
How much money might be collected if online retailers begin collecting sales tax varies greatly. Thimmesch says the estimates range from as low as $11 billion to as high as $23 billion. Nebraska could net anywhere from $40 million to $100 million annually.
AUDIO: Brent Martin reports [:40]