Streamlined Sales Tax

The Streamlined Sales Tax project is the states’ effort to require you to collect sales tax for every state in the country. Currently, you are not required to collect sales tax if you do not have a business presence in a given state (nexus).

 

TruST

ERA has partnered with likeminded trade associations on the issue including NetChoice, American Catalog Mailers Association and the DMA to form TruST (True Simplification of Taxation Coalition). Together we continue strong advocacy for true simplification that would not pose undue and harmful burdens upon the ERA membership. This advocacy position is spelled out in detail at www.truesimplification.org.

 

ERA Sets the Record Straight on the Streamlined Sales Tax Project
 

As Published in the Palm Beach Post

The Post's editorial, "Collect Internet sales tax" argues that joining the Streamlined Sales Tax Project would help Florida businesses. In fact, the Streamlined Sales Tax Agreement would be disastrous for Florida's electronic retailers and do little to help brick-and-mortar businesses.

The editorial doesn't take into account that Main Street retailers use the Internet to compete against mass retailers. Also, simplifying sales-tax systems is not nearly as straightforward as the editorial suggests. Finally, the suggested potential for revenue is based on tax loss numbers that don't add up.

Although its original mission was to bring simplicity and uniformity to state sales-tax laws and make sales-tax collection easier for online retailers, the Streamlined Project has accomplished little of either. The Streamlined Sales Tax Agreement has failed to reduce the number of sales-tax jurisdictions, which stands at around 7,500. Nor has it reduced the number of local and state sales-tax rates. In fact, it allows for state and local rates, so Florida businesses could have more than 15,000 rates to keep up with.

Meanwhile, it has not reduced the number of audits a Florida business would be subject to. Each state still could conduct its own audit of any Florida business that sells online. And last year, the project abandoned one of its bedrock principles, having a uniform destination sourcing rule, in favor of a two-tiered system. Now, some states can have local businesses collect taxes based on the single rate where the retailer is located, while Internet retailers will have to collect whatever rate applies in each customer's taxing jurisdiction.

The states, big-box retailers and other advocates of the Streamlined Sales Tax Agreement continue to use faulty revenue loss estimates. They cite a 2004 University of Tennessee study that blames e-commerce for more than $22''billion in lost sales tax during 2005. That figure was half as much as the same researchers had forecast in a 2001 study. Their reduced estimate recognized greater use of tax compliance by businesses and the growing trend of chains like Walmart and Home Depot to collect sales tax on online sales. A study by Forrester Research found that 75 percent of all online sales come from "multi-channel" retailers, which most likely already have a physical presence in Florida and collect sales taxes. Joining the Streamlined Sales Tax Agreement would not generate anywhere close to the amount of revenue proponents are hoping for and would make things more complicated for Florida businesses.

JULIE COONS
President and CEO
Electronic Retailing Association
Arlington, Va.