Tax changes are always a touchy subject. Legislation currently being considered by the Senate that would help states compel large business to collect sales tax for online transactions isn’t any different – except where the battle lines have been drawn. As the New York Times points out, this issue has created intraparty fights on both sides of the aisle and made odd bedfellows among the states.
And if the legislation does indeed pass the Senate and eventually the House, all eyes will turn to the states, some of which are trying to get ahead of the game. CQ StateTrack has identified 16 bills, spread over nearly as many states, dealing with an online sales tax.
- Some are purely ceremonial, like resolutions in Nevada, South Dakota and Utah urging the states’ congressional delegations to support the federal legislation.
- In Indiana, legislators are working on accelerating tax collection. Gov. Mitch Daniels (R) already negotiated a deal through which the state would require online retailers to begin collecting sales tax on Jan. 1, 2014. But a bill moving the start date up to July 1 has gone to conference committee.
- Oregon will be an interesting state to watch. As one of only five states that do not collect sales tax (along with Alaska, Delaware, Montana and New Hampshire), Oregon would not be affected by the federal bill. However, some legislators are pushing for a rewrite of the state’s tax code and have introduced a resolution that would ask voters to decide whether to institute a state income tax.
Many of these states are merely modifying their current tax code. But if the Marketplace Fairness Act passes, such activity could get a lot more complicated. If you need some background on the legislation, The Washington Post did a nice recap.