We recently learned about a bill by Senators Wyden, Shaheen, Hassan, and Merkley, that would mitigate the online sales tax issue, for a while. Senate bill S2350 proposes:
Online Sales Simplicity and Small Business Relief Act of 2019 This bill prohibits states from imposing a sales tax collection duty on a remote seller for any sale that occurred prior to June 21, 2018. A “remote seller” is a person without a physical presence in a state who makes a sale in the state. A state may impose a sales tax collection duty on a remote seller only for a sale that occurs after January 1, 2021. In the case of a small business remote seller (no more than $10 million in gross annual receipts in the United States), a state may not impose a sales tax collection duty on any person other than the purchaser if the sale is made (1) on or after June 21, 2018; and (2) before the date that is 30 days after the states develop and Congress approves an interstate compact, applicable to the state and sale, governing the imposition of tax collection duties on remote sellers.
I’m guessing the expiration is just to make it easier to swallow now, so some longer-term debate about the proper way to solve the online sales tax issue for small businesses can happen while small businesses have some protection from abuse by the states.
Introduced in early August, so far this bill has only been “read twice and referred to the Committee on Finance. (on 7/31/2019).”
We can only hope this bill is given some serious consideration. A moratorium, even a short one, is welcomed at this point.
In the long term, I think some reasonably revenue cap is a good solution to protecting small businesses from significant compliance costs. Even with a much higher state sales revenue threshold, requiring sellers to monitor sales into every state, and then, on a dime, start collecting sales tax to customers in that state, has serious issues. From where we sit, the $10 million revenue threshold looks pretty safe, but other businesses may still cry foul.
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