OLYMPIA – Addressing the public statement that the Federation of Tax Administrators (FTA) will abandon federal efforts for taxation of remote sales in favor of supporting state-level policies, Sen. Reuven Carlyle, D-Seattle, released the following:
“The group representing the nation’s state tax administrators appears to have given up on any meaningful action from Congress concerning the taxation of remote sales. The resolution passed by the FTA is far from trivial or an irrelevant footnote to Washington state. Rather, this shift is representative of a critically important public policy issue that directly impacts our ability to fund education.
“Washington is highly dependent upon sales tax revenues to fund education and a multitude of other vital services. Ensuring that we accurately collect sales and use taxes is critical.
“Striking a fair balance between sales tax collection from traditional mom-and-pop storefronts and web-based sellers is essential. It’s disappointing that the Republican Congress – particularly the chair of the House Republican Conference, Rep. Cathy McMorris Rodgers — is aggressively thwarting this important national policy that is broadly supported, most notably by the primary technology companies in our state.
“For years I’ve worked to equalize tax collections to help fund education. We must now accept that it is time for the Washington Legislature to pass the state version of streamlined sales tax legislation. Passing this legislation would mean hundreds of millions of dollars in increased collections of existing tax obligations that could help us meet the state’s education funding needs.
“We should embrace the tides shifting to state control on this issue and utilize an internet sales tax to fulfill our paramount duty under the state constitution.”
From Tax Notes’ Maria Koklanaris – June 16, 2017
The group representing the nation’s state tax administrators appears to have given up on any meaningful action from Congress on the issue of the taxation of remote sales.
At its annual meeting in Seattle on June 14, the Federation of Tax Administrators adopted a new resolution on the question of who should establish the responsibility of remote sellers to collect and remit tax to states in which they have no physical presence. Previously, the FTA acknowledged a role for Congress to establish legislation to do so. But now the organization says congressional action doesn’t seem likely and that it might not necessarily be a good thing for states if lawmakers did act.
“FTA will move from hoping Congress will help to thinking that anything they could do will be worse,” said Kevin Sullivan, president of the group and the commissioner of the Connecticut Department of Revenue Services.
The FTA said it therefore supports the action moving to the states. It said it would support states’ rights to establish laws related to remote sales, and also to craft that legislation in such a way that it could be used as a vehicle for the possible overturning of Quill v. North Dakota, the 1992 U.S. Supreme Court decision reaffirming the physical presence test. The most prominent piece of legislation in that vein, South Dakota’s S.B. 106, was struck down by a local court, but the state has appealed the decision to the South Dakota Supreme Court. Speaking at an FTA panel about Quill, South Dakota Revenue Secretary Andy Gerlach said the state is hoping that the case will be on the state supreme court’s fall docket.
“Decades of good-faith effort has generated no meaningful progress toward the goal of developing a workable solution for all stakeholders related to the issue of remote seller collection authority,” the FTA resolution said. “At this time, it appears that any federal legislation could contain unacceptable language that limits state taxing authority. Therefore, FTA supports the right of any state to enact fair and reasonable laws related to remote seller collection authority and to test the limits of, or seek to overturn, the Quill decision.”
The resolution acknowledged that the Senate in 2013 passed the Marketplace Fairness Act, but said any proposal from the House has been “unadministrable.”
“House committee leadership has been publicly adamant that it would not consider the Marketplace Fairness Act. The House instead has floated vague proposals, occasionally offered draft language, and only rarely introduced a bill,” the resolution said. “In every form, the proposals have been unadministrable. At their worst, they would expand preemptions of state tax authority and severely affect state tax authority over sellers who are currently collecting and remitting sales and use tax.”