The Senate vote Monday in favor of the Marketplace Fairness Act (69-27) starts the ball rolling on a potentially level playing field that could result in sales taxes being collected on all sales, including internet, and not just the brick-and-mortar businesses we patronize locally.
Senate Bill 743 is by no means a perfect bill and the federal government is rarely the first choice we check when it comes to seeking jump-starts for taxation fairness. But we come out in favor of this bill and the momentum it has created because we truly believe it is not a new tax — but rather a tax as Sen. Lamar Alexander, R-Tenn., points out “that everybody owes but only some people pay.”
Since 1965 in Idaho, purchasers of out-of-state goods from (catalogues, internet) have been required to report those purchases and pay the appropriate taxes on their income tax returns. The Idaho State Tax Commission pointed out to me today that compliance on that requirement is at 1.4 percent.
The Idaho legislature, to date, has declined the option to join the The Streamlined Sales Tax Governing Board, which has this mission statement:
The effort that became the Streamlined Sales Tax Governing Board began in March 2000. The goal of this effort is to find solutions for the complexity in state sales tax systems that resulted in the U.S. Supreme Court holding (Bellas Hess v. Illionis and Quill Corp. v. North Dakota) that a state may not require a seller that does not have a physical presence in the state to collect tax on sales into the state. The Court ruled that the existing system was too complicated to impose on a business that did not have a physical presence in the state. The Court said Congress has the authority to allow states to require remote sellers to collect tax.
For lack of any other action, Congress is playing its Congress card.
The House of Representatives will soon get a chance to consider the senate-passed SB 743 and make some improvements on it. Though Idaho Senators Jim Risch and Mike Crapo did not end up voting for the bill, they say they support the main tenets of bringing fairness to the sales tax issue. Risch’s suggested improvements of raising the exemption level from $1 million to $3 million would indeed bring better protection to small businesses participating in Internet commerce and we hope the House of Representatives considers that tweak.
Rep. Mike Simpson, R-Idaho, is ready to get a look at the legislation. Nikki Watts, Simpson’s communications director, made these comments:
It is my understanding that the House will make improvements to the Senate bill and Congressman Simpson will review the House version. It is important to note that this isn’t a new tax, it is simply fixing the process for collecting taxes already due. A business owner in Idaho should not be punished because an out of state competitor doesn’t have to collect the tax.
Read about Senate Bill 743 here:
Read more about the estimated revenue increase Idaho could expect here.
We understand the bill moves to the House Judiciary Committee next — which happens to be where Rep. Raul Labrador, R-Idaho, serves. We have a call in for comment and will share a response if we get one.