Internet tax an issue for state, Arkansas congressman says
Little Rock,
March 28, 2018
http://http//www.arkansasonline.com/news/2018/mar/28/net-tax-an-issue-for-state-hill-says-20/?f=news-arkansas Hill, a Republican representing Arkansas' 2nd Congressional District in the U.S. House of Representatives, said Congress isn't the "express lane to solve this problem" and that, in his opinion, it should be resolved at the state level. At the Little Rock Board of Director's invitation, Hill met with them Tuesday afternoon about Internet sales tax. He said the consensus in the U.S. House is to wait on the Supreme Court's decision in the upcoming case South Dakota v. Wayfair, Inc. that will be heard in April with a scheduled decision announced in June. At issue is whether companies should collect sales tax from customers who make purchases online and remit that back to states and localities. A 1992 ruling says that only companies with a physical brick and mortar location in a particular state must collect sales tax from a customer making an online purchase from the company in that state. "If [the U.S. Supreme Court] upholds it, I think you'll see a revised effort among states to proceed like the Colorado example and move on. ... You will see people press on. Our own [Arkansas] Legislature last year considered this and then got into a fight on how to spend the money. I don't think it's fair to say it wasn't considered. ... And maybe it was considered abruptly and not with a lot of education," Hill said. Colorado decided to make companies invoice customers yearly on what sales tax was owed on purchases made with that company, and also provide a copy to the state's department of finance. The state hasn't started the practice yet because the matter is caught up in court. Little Rock board members said that is a convoluted method and most preferred a federal fix to the law. The U.S. Senate has already passed a Marketplace Fairness Act that requires companies to collect tax on online sales, but the act never made it out of the House. Hill said either way the Supreme Court rules in the Wayfair case, he expects state legislatures to proceed in quick fashion. Mayor Mark Stodola explained that uncollected sales tax revenue is detrimental for cities. It not only means less resources, sidewalks and roads, but also is "an erosion of our brick and mortar businesses." "That's a very critical importance," Stodola said. Stores often complain about the unfair advantage that online sales have in not having to charge sales tax. There are no clear estimates on how much Little Rock is missing out on in uncollected sales tax. Amazon began voluntarily collecting Arkansas sales and use tax on the purchase of its goods in May 2017. It does not require third-party sellers on its website to do so. Little Rock saw a large increase in its collection of tax from online sales after that. From May 2017 through January 2018, the city received $620,089 in sales tax revenue from online purchases. That's about $459,000 more than the $160,931 collected from May 2016 to January 2017. City Attorney Tom Carpenter has conservatively estimated that the city would collect $1.4 million annually in online sales tax. Stodola said he thinks it would be more. Hill also thinks the number would be higher. "The [Government Accountability Office] estimates it's about $13 billion that states and local governments could collect if they could collect the sales tax. I find that interesting. It's a big number, but in a $17 trillion economy, it strikes me fairly as a modest number," Hill said. "I do think there's great potential there and it's money our state and local government needs greatly to perform the core functions, not to mention the many miles of sidewalk or road work we could do," Hill added. But, he said it would be an "unusual solution" to "impose a federal solution on what's been a state prerogative," referring to state control of how sales and use tax is collected. While some directors were hoping to hear more support for a federal fix, Ward 1 Director Erma Hendrix said she agreed with Hill. City Director Dean Kumpuris, on the other hand, disagreed, saying state fixes would be like patchwork across the U.S. and that it was time for Congress to do something about the loss of revenue to cities. Hill said Congress moves slow by design. "I would suspect if we see the Wayfair case rule in favor of overturning [the 1992 Supreme Court ruling,] I would suspect you see an immediate action in state capitols," Hill said. "That may inform us at the federal level what changes we might make in that legislation and see if there is a more consensus to move it because there's clarity and purpose then. You are not against a federal court case." |
