Sen. Byron Dorgan (D-ND) has reintroduced a bill that would authorize the states to tax remote sales by any direct response vehicle.
The measure, which has been referred to the Senate Finance Committee, is the second one of its type introduced in the Senate this year.
Dorgan's bill, the Internet Tax Moratorium and Equity Act (S-512) would authorize the states to enter into an Interstate Sales and Use Compact to develop one single, uniform statewide tax rate before Jan. 1, 2006.
States would have 120 days after the bill is signed into law to develop the compact. Non-participating states could not require remote sellers to pay use taxes on their sales. The measure would have no affect other business taxes such as franchise and income taxes, nor would it affect licensing requirements.
The legislation, which would also extend the existing moratorium on new Internet taxes to Dec. 31, 2005 is nearly identical to a bill that Dorgan introduced last year. That bill died with the expiration of the 106th Congress. The moratorium is set to expire Oct. 21.
Dorgan said Congress had to "begin the process of finding a long-term solution to the problem this year before the moratorium expires," when he introduced the measure. He said he and 10 other Senators believe the measure "strikes a proper balance between the interests of the Internet industry, state and local governments, local retailers and remote sellers."
Last month Sen. Ron Wyden (D-OR), introduced the Internet Tax Nondiscrimination Act, which also authorizes states to develop a single, nation-wide use-tax rate which could be imposed on remote sales. A bill supported by President Bush, Wyden had said.
The Direct Marketing Association prefers Wyden's bill over Dorgan's, according to Jerry Cerasale, its senior vice president of government affairs.
Roscoe P. Starek III, DMA senior vice president of catalog issues, explained that Wyden's bill would require the states to come back and ask Congress for the authority to begin imposing use taxes on remote sales only after reaching agreement on a single, unified use-tax rate.
He added that while Dorgan's bill sets out some use-tax simplification measures, they "are not enough that the [direct marketing] industry would feel that the burdens the Quill case talked about would be alleviated."
The U.S. Supreme Court, in a 1992 ruling that prohibited North Dakota from collecting use taxes from Quill Corp., a Lincolnshire, IL, office supplies cataloger, said that remote sales could not be taxed unless the seller had a physical presence in the state and such taxes were authorized by Congress.
