A bipartisan group of lawmakers rolled out legislation on Friday that’s designed to provide certainty to businesses following the Supreme Court’s online sales tax ruling in June.
The bill would provide a framework for when states can require out-of-state online retailers to collect their sales taxes.
“Online sellers need clarity and stability in the sales tax arena,” said Rep. Jim Sensenbrenner (R-Wis.), one of the bill’s authors. “Our bill will protect small businesses and internet entrepreneurs from excessive regulatory burdens.”
In its June opinion in South Dakota v. Wayfair, the Supreme Court overturned a 1992 ruling that restricted states’ ability to compel out-of-state internet business to collect their sales taxes.
The court praised features of South Dakota’s law requiring certain online retailers to collect its sales taxes, but the court didn’t provide specific criteria for what would make a state’s online sales tax law constitutional.
Critics of the Supreme Court’s ruling are concerned that it will be burdensome for small online retailers, since there are thousands of state and local tax jurisdictions across the country.
Sensenbrenner’s bill is aimed at addressing those concerns. It would prevent states from requiring remote sellers to collect sales taxes on purchases made before the Supreme Court’s ruling was issued. It also would only allow states to impose sales tax collection duties on remote sellers for purchases made after Jan. 1, 2019.
Additionally, the legislation would prevent states from requiring online retailers with less than $10 million in sales to collect their sales taxes until the states come up with a compact simplifying their sales-tax collection that’s approved by Congress.
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