Washington—Michigan has joined a multistate sales tax simplification plan designed to ease tax collection from out-of-state and online marketers. With the state’s governor John Engler signing legislation on Oct. 8, Michigan becomes the 20th state to approve the bill, which has been drafted and distributed to state legislatures by representatives of 33 states as part of the Streamlined Sales Tax Project. The states whose governors sign the legislation will help determine the actual steps needed to simplify a wide assortment of taxes administrated by thousands off local sales tax jurisdictions.
The overwhelming complexity of navigating all those local sales taxes are what helped office supplies cataloger Quill Corp. defeat North Dakota in 1992 in a Supreme Court ruling that determined that states couldn’t require businesses without a physical presence in a state to collect sales taxes on sales made to the state’s residents.
But the rising volume of sales placed with out-of-state i.merchants and catalogers and their feared impact on local state revenue have prompted the tax simplification effort, whose ultimate goal is to overturn the “Quill v. North Dakota” ruling. Michigan expects to lose $500 million in uncollected taxes from out-of-state merchants this year.