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MFA Vote Promised in 2016

  • Feb 12, 2016 | Gail Cole

 Is Internet sales tax gaining momentum in Washington?

Those of us who follow news regarding Internet sales tax have aged since May 2013, when the Senate passed the Marketplace Fairness Act of 2013 and sent it to the House. Many thought the issue would be decided by the end of that year: either the federal government would grant states the authority to tax sales made by certain remote sellers, or legislators would definitely reject the idea. Instead, 2013 closed with no action — MFA 2013 never saw the light of day in the House.

2014 came and went without any real action on the issue. Three new pieces of remote sales tax legislation were passed around Washington at the start of 2015 (Marketplace Fairness Act of 2015, Online Sales Simplification Act, Remote Transactions Parity Act), but they never went anywhere. In the absence of a federal solution to an issue that has been draining sales tax revenue from states, states are creating remote sales tax legislation of their own.

If federal legislators do not deal with this issue, the United States Supreme Court could take it on. Indeed, there is talk at the state level of the need to kill Quill, a reference to the 1992 Supreme Court case Quill Corp. v. North Dakota, which upheld an earlier ruling that a state cannot tax sales by vendors lacking substantial nexus in that state. Alabama has already instituted new requirements for remote sellers. It expects this rule will be challenged, and it is prepared to go all the way to the Supreme Court to fight it.

Vote in 2016 promised

Now, it seems, a vote on Internet sales tax has been promised. In order for the customs enforcement bill (that also permanently bans state and local taxes on Internet access) to “get … unstuck” and make it to President Obama’s desk, “Senate Majority Leader Mitch McConnell had to promise online sales backers a vote.”

Long-time remote sales tax proponent Sen. Lamar Alexander (R-Tenn.) told reporters, “I think the chances are very good that the House will consider and pass a Marketplace Fairness Act, and that the Senate will as well. And if we don’t, I can predict exactly what is going to happen. Governors and states are going to start suing companies all over the country who are not collecting taxes that are owed. And when that happens, those companies are going to rush to Congress and pass the Marketplace Fairness Act” (Politico).

Remote sales tax proponents like Sen. Alexander and Rep. Jason Chaffetz (R-Utah) are feeling optimistic about McConnell’s promise and the fact that MFA opponent Sen. Ron Wyden (D-Ore.) has promised he won’t “use any procedural maneuvers to hold up an online sales tax bill.” Yet their optimism should be tempered. The office of House Speaker Paul Ryan has “given no guarantees and set no timelines about voting on an online sales tax bill this year.”

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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.