New State Online Sales Tax Bill Introduced in Congress

Posted on October 13, 2011 by Joseph Henchman

Yesterday we reported on what might be in a new online sales tax bill being introduced into Congress. The actual version was introduced yesterday and is different from that version. Read the full version (PDF) of the bill; here is a talking points sheet being distributed by supporters. The bill is reportedly called the Marketplace Equity Act but the version I obtained yesterday has that blank.

Key points of the bill:

• A state must first implement a simplified system of sales tax administration, as defined by meeting four requirements:
  • Remote sellers are exempt if they have less than $1 million in U.S. sales or $100,000 in sales in the state.
  • One state return to be used by remote sellers, which cannot be required to filed more frequently than required for other sellers.
  • Uniform statewide tax base (list of things subject to tax).
  • The state can require remote sellers to pay one of three tax rates: (1) a single rate blending the state rate and the average local rate (for an idea of these, see our recent local sales tax report), (2) the maximum state rate exclusive of local rates, or (3) the tax rate of the customer’s location although the state must “make available adequate software that substantially eases the burden of collecting at multiple rates,” although this is not further defined. This is the most concerning part of the bill: states are likely to prefer (3) and then skimp on easing compliance burdens.

Read the rest of the provisions of the bill here.