The Digital Goods and Services Tax Fairness Act of 2011 is touted as “A bill to promote neutrality, simplicity, and fairness in the taxation of digital goods and digital services.” The official summary states that the bill “prohibits a state or local jurisdiction from imposing multiple or discriminatory taxes on or with respect to the sale or use of digital goods or services delivered or transferred electronically to a customer.”
AGAINST: SSTGB – Streamlined Sales Tax Governing Board
On August 31, the SSTGB* passed a resolution opposing the Digital Goods and Services Tax Fairness Act. The wording of the Act appears to “…contain many overly broad, ambiguous, and poorly defined terms, and would require all Streamline states to change to their law.” This would make it difficult for the states to “…interpret and administer the law in regard to sales and use tax on digital goods and services and would exacerbate the problems caused by Quill v. North Dakota by imposing a mandatory sourcing regime without providing states with the authority to tax sellers without physical presence.”
Long before the SSTGB weighed in, The Wireless Association CTIA tossed their support in for the bill.
FOR: CTIA – The Wireless Association
“CTIA and the wireless industry appreciate the leadership of Senators Wyden and Thune and Congressmen Smith and Cohen for introducing this legislation as a way to stop the discriminatory taxes and fees on consumers who purchase items via the Internet. It makes no sense to levy additional, and sometimes hidden, state and local taxes against items that consumers purchase via the Internet and not in stores. Once passed, this legislation would provide tax administrators and consumers a better understanding of how music, books and other downloadable products should be taxed. At the same time, it would continue to encourage digital commerce to flourish and assist the nation’s economic recovery and enhance American economic competitiveness.
“We look forward to working with these sponsors and other supporters of the Digital Goods and Services Tax Fairness Act of 2011 to get this bill passed, which will provide consumers with some much needed clarity and assurances that their online purchases are not being taxed unfairly.”
Even though they oppose the bill, the SSTGB “…encourage proponents of the Act to engage the Streamlined organization and other interested stakeholders to establish model rules to accomplish their goals or to make changes to the Acts that would address the needs and concerns of the state and local governments.”
But according to one blogger, “It’s important to note that this legislation does not authorize or prohibit the application of sales tax on the purchase of goods. It just says tht only the state in which the buyer lives has the authority to tax the sale.” He goes on to say, “Tax compliance is difficult enough. Provisions that add more certainty decrease compliance costs and should certainly be encouraged.”
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*This project is funded under an agreement with the Streamlined Sales Tax Governing Board, Inc.