Disaster Puts Use-Tax Legislation on Hold–For Now

Washington—The attacks in New York and Washington have stalled efforts to append legislation regarding use-tax collection and tax simplification to an extension of the Internet access tax moratorium. Congress is likely to extend the moratorium, which expires Oct. 21, another two to five years.

“It’s the view of everyone I’ve spoken with on Capitol Hill that, given the terrorist tragedy, any controversial legislation is being deferred,” says Direct Marketing Association vice president, government affairs Mark Micali. “Given that, the feeling is there will be no consideration of any change in interstate sales tax collection or any call for simplified sales tax collection at this point.”

As discussions on extending the Internet access tax moratorium were heating up this summer, some members of Congress and some state governors were calling for an eventual overturning of “Quill v. North Dakota,” the Supreme Court ruling that forbids a state to collect sales taxes from companies without a physical presence in the state.

Governors and some congressmen were also calling for a simplification of the entire sales tax process. But both issues were contentious, “so it appears that the moratorium without an attachment for sales tax collection will move through Congress on its own,” Micali says.