Legislation that would extend the current Internet tax moratorium but eventually impose state taxes on remotely-based online merchants was introduced in the U.S. Senate last week by Sen. Byron Dorgan (D-ND).
Specifically, the Internet Tax Moratorium and Equity Act ( S. 2775) would:
* Extend the existing moratorium on Internet taxes through Dec. 31, 2005
* Authorize states to enter into a compact through which they would adopt a uniform sales and use tax system
* Authorize adopting states to require remote sellers with more than $5 million in annual gross sales to collect and remit sales and use taxes on remote sales
* Prohibit states not participating in this compact from benefit from its provisions
“The big problem we have with this bill is that states can just say they’ve simplified their own tax structures and can begin collecting the taxes without an authorization from Congress,” said Direct Marketing Association spokesman Steven Altobelli. “We think they’ve got to backwards. States should first get an authorization from Congress and only then begin collecting taxes.”
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