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New Push for Internet Sales Tax in Utah


 The virtual shopping cart reigns this holiday season.

For years, there has been strong support for remote sales tax in Utah. State lawmakers have proposed several remote sales tax bills and urged federal lawmakers to “Support Equity and Sales Tax Fairness.” Although passage of a remote sales tax law eludes them, lawmakers did successfully enact legislation encouraging out-of-state sellers to voluntarily collect Utah sales and use tax.

Still, the state is collecting fewer sales tax dollars than it did 10 years ago. Taxing online sales could bring the state an additional $89 million to $300 million annually, according to estimates. Although consumers are supposed to remit use tax on untaxed sales of taxable goods (like many online purchases), fewer than 2% of Utahans actually do.

The Internet sales tax discussion is resurfacing across the nation due to the holidays. Early data from Black Friday and Cyber Monday suggests more online or mobile shopping than ever. In-store sales on Thanksgiving and Black Friday 2015 were down from the same period in 2014, but online sales were up during the entire holiday weekend. Adobe Systems Inc. put Cyber Monday sales at $3 billion (as compared to $2 billion in 2012).

Utah

Faced with the prospect of losing millions of dollars in potential sales tax revenue, lawmakers in Utah are reopening the online sales tax debate. Senator Wayne Harper (R-Salt Lake City), who introduced remote sales tax legislation last spring, is again speaking of the need to “alleviate the problems this causes for businesses and individuals.” House Speaker Greg Hughes (R-Draper) says, “There’s an equity issue here.”

Yet Internet sales tax also has opponents in Utah. Rep. Justin Fawson (R-North Ogden), for example, says he’d “opt to keep things as they are.”

The state of affairs in Utah is mirrored at the federal level, where there is both support for, and opposition against, remote sales tax.

Federal vs. state solution?

Federal lawmakers have been poised to act on the issue of Internet sales tax for years. The Senate passed the Marketplace Fairness Act of 2013 in May 2013, leading proponents to hope that states would soon be granted the authority to tax out-of-state sellers. Then, opponents successfully blocked the measure in the House.

Since then, there has been much talk and little action. 2015 saw the introduction of three remote sales tax bills: the Marketplace Fairness Act of 2015, the Remote Transactions Parity Act of 2015, and the Online Sales Simplification Act (in draft form only). The year is likely to close with the enactment of none of them.

Since 2016 is a presidential election year, anything is possible at the federal level. Legislators and presidential candidates may avoid the issue as a “hot potato,” or they may stake their political futures on supporting or opposing a version of an existing online sales tax bill or a new plan .

Meanwhile, changes at the state level have made it so more online shoppers are paying sales tax this holiday season than ever before. Amazon alone now collects sales tax in 26 states. This fall, Michigan, Vermont and Washington all expanded online sales tax collections.

Maybe Utah will follow suit. Then again, maybe not.

Read more about affiliate nexus and the out-of-state seller, and why a federally imposed Internet sales tax may not matter.

photo credit: quantumlars via photopin cc


Sales tax rates, rules, and regulations change frequently. Although we hope you'll find this information helpful, this blog is for informational purposes only and does not provide legal or tax advice.
Gail Cole
Avalara Author
Gail Cole
Gail Cole
Avalara Author Gail Cole
Gail began researching and writing about sales tax in 2012 and has been fascinated with it ever since. She has a penchant for uncovering unusual tax facts, and endeavors to make complex sales tax laws more digestible for both experts and laypeople.