Wyden in 11th-Hour Push to Broaden Internet Access Tax Ban

Washington—Sen. Ron Wyden (D-OR) introduced a bill on Oct. 2 that calls not only for a two-year extension of the Internet Tax Freedom Act but also for other e-commerce-related tax collection bans. The Internet Tax Freedom Act, which implemented a moratorium on Internet access taxes, expires on Oct. 21.

Wyden’s bill, S. 1481, would bar other “multiple and discriminatory” taxes on e-commerce while encouraging states to simplify their sales and use taxes, in addition to extending the Internet access tax moratorium. Sens. Patrick Leahy (D-VT) and John McCain (R-AZ) cosponsored the bill, which has been referred to the Senate Commerce, Science, and Transportation committee.

But the Direct Marketing Association opposes the bill, concerned that by encouraging localities to simplify their tax codes, S. 1481 could lead to the eventual collection of local sales taxes. The bill “inappropriately links the extension of the Internet access tax moratorium with the issue of potential interstate sales collection,” says Mark Micali, DMA vice president, government affairs. “And there’s clearly no concensus on interstate sales tax collection. Instead, any discussion of the divisive sales tax debate should be saved for an appropriate time when there’s no pressure of a looming moratorium deadline.”

Under the 1992 Supreme Court decision “Quill v. North Dakota,” states and other localities can’t force remote marketers such as catalogers to collect sales taxes unless they have a physical presence in the locality. The court agreed that collecting for the myriad localities, with their varying tax codes, would be an administrative nightmare. But state and local officials have never stopped battling for an overturn of the decision, citing billions of dollars in lost revenue.

In fact, states stand to lose more than $13 billion in uncollected sales taxes on online transactions alone in 2001, according to a University of Tennessee study introduced on Oct. 2. The study adds that during the next five years, uncollected state e-commerce taxes will soar to $45 billion.

Partner Content

The Gift of Wow: Preparing your store for the holiday season - Netsuite
Being prepared for the holiday rush used to mean stocking shelves and making sure your associates were ready for the long hours. But the digital revolution has changed everything, most importantly, customer expectations. Retailers with a physical store presence should be asking themselves—what am I doing to wow the customer?
3 Critical Components to Achieving the Perfect Order - NetSuite
Explore the 3 critical components to delivering the perfect order.
Streamlining Unified Commerce Complexity - NetSuite
Explore how consolidating multiple systems through a cloud-based commerce platform provides a seamless experience for both you, and your customer.
Strategies for Maximizing Mobile Point-of-Sale Technology - NetSuite
Learn the top five innovative ways to utilize your mobile POS technology to drive customer engagement, increase sales and elevate your brand.