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News

The Daily

House Bill Revives Online Sales Tax Debate

By:
Chris Gaetano
Published Date:
Jun 16, 2015
ChaffetzHouse Oversight Chairman Jason Chaffetz (R-Utah) has introduced a new bill, the Remote Transactions Parity Act, meant to be a less politically objectionable version of a previous proposal that ultimately died in the House last Congress, according to the Hill. Under the bill, states are empowered, but not mandated, to require online retailers to collect and remit sales and use taxes on transactions. Like the previous effort, the Marketplace Fairness Act (MFA), the tax would depend on where the retailer is located, not the customer. Unlike the previous act, the bill also exempts businesses under $5 million in gross receipts from remote state audits entirely, and has a larger threshold before the collection rules kick in: in the first year of implementation, businesses under $10 million are exempted from the collection requirements, then phasing to $5 million in the second year, and $1 million in the third. This is in contrast to the MFA, which only had an immediate $1 million exemption. It also requires that states give online sellers the required software to actually collect and pay these taxes, with all set-up, installation and maintenance costs being on the individual states. It also clarifies that the act of collecting and remitting sales tax does not establish nexus in that state.