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Senate Overlooks Major Defects in Internet Tax System


Post Date: May 7, 2013
By: Susan Taplinger

Legislation Gives New Taxing Powers to Any State, US Territory and over 550 Tribal Organizations

Washington, DC, May 7, 2013 – Senators today passed a new Internet sales tax system that grants state tax collectors unprecedented powers to lay burdensome new requirements on Internet and remote sellers. Jerry Cerasale, co-founder of the TruST (True Simplification of Taxation) coalition and senior vice president of government affairs for the Direct Marketing Association (DMA), offered the following remarks:

“The Senate’s decision to authorize a new Internet and remote sales tax system is an unfortunate misstep that will harm many small Internet and catalog businesses. We’re disheartened by the lack of diligence and dialogue in fully weighing the added costs and complexities under this new tax system.”

Cerasale added, “This legislation leaves too many important questions unanswered and fails to meet the minimum level of simplification outlined by the TruST coalition. This is not a sustainable model.”

TruST calls on legislators to guarantee the following minimum simplification requirements before authorizing states to compel businesses across the country to comply with an onerous new sales tax system.

TruST Minimum Simplification Requirements:

States must provide consolidated and certified software solution for rate lookup, collection, electronic filing, and funds transfer. Users of the software would be immune from state and civil liability for errors in taxes collected.

  • A single sales tax rate per state for remote sales.
  • States should compensate businesses for reasonable costs of collecting sales taxes, including purchase and implementation of software.
  • A single set of definitions for taxable and exempt products for all states.
  • A single audit on behalf of all states and local jurisdictions conducted by a single state where the seller has physical nexus, or a designated state in cases where a seller lacks physical nexus in any sales tax state.
  • There should be a common sales tax return for remote sellers to file.
  • A single national rule for sourcing sales.
  • Harmonize sales tax holidays and thresholds, or give remote sellers an optional exemption from participation in sales tax holidays and thresholds.
  • Allow remote sellers to challenge states in federal district court for disputes on sales tax collection, including whether a state is following congressionally required simplifications.
  • Preempt and preclude state laws imposing sales tax obligations on businesses with no physical presence in that state.
  • Collection of sales tax under federal legislation does not create nexus for any other business purpose.
  • A congressionally-determined exception for small businesses.

About TruST

The True Simplification of Taxation (TruST) Coalition represents American businesses in the fight to keep interstate commerce and competition free from unfair tax burdens imposed by states where our businesses have no operations or representation. TruST believes that Congress should not overturn the physical presence standard in Quill without first requiring by statute the simplification of sales and use taxes within the States as well as simplification of the administrative requirements for collection and auditing of those taxes. (www.truesimplification.org)

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