Contact: Ralph Tabor, Associate Legislative Director for Taxation and Finance (Tel. 202/942-4254; Fax: 202/942-4281; e-mail: rtabor@naco.org
April 17, 2000
Urgent -- Immediate Action Needed!
Talk to Your Representative and Senators During the Easter Recess and Urge Them To Oppose Extension or Expansion of the Internet Tax Moratorium ¾ Pass the enclosed County Board Resolution and Send it to Your Congressional Delegation
Internet tax issues are now heating up in the Congress. Bills have been introduced to extend the current Internet tax moratorium for five more years and for a permanent extension of the moratorium. Legislation has been introduced to enact into law the Supreme Court decision to restrict the authority of states to collect taxes only in their own state (physical nexus). Legislation also has been introduced in the House to implement the pro business proposals included in the report of the Advisory Commission on Electronic Commerce.
The Senate Commerce Committee is expected in May to mark up legislation (S. 2255) to extend the Internet tax moratorium for five more years. NACo is working with a bipartisan group of Senators to amend the bill to authorize states to require collection of remote sales and use taxes if states simplify their sales tax system. The senators would accept a short extension of the moratorium that is linked to the simplification of state and local sales taxes.
The House Commerce and Judiciary Committees also plan hearings and markups on legislation in May. House Speaker Dennis Hastert has told both committees to report legislation by the end of May to extend the moratorium and permanently ban all Internet access taxes.
The Senate will be in recess until April 25 and the House until May 2. It is critical that you talk to your senators and representatives during the Easter recess. Urge them to oppose any changes in the Internet tax moratorium unless it is linked to sales tax simplification. Explain that the current moratorium does not expire until October 21, 2001—17 months from now. Let them know how a 10 or 20 percent loss in state and local sales tax revenues over the next few years will impact your county.
Urge your county board to adopt the enclosed resolution on Internet taxes and send it to your Congressional delegation. This is a critical time and they need to hear from you.
__________________ County, state
Resolution on delaying congressional action on internet tax moratorium
Whereas out-of-state remote sellers who conduct sales via the Internet, mail order, and phone are not required by law to collect existing sales and use taxes imposed by state and local governments; and
Whereas the primary barrier to collecting taxes on remote sales is the Supreme court’s ruling in Quill V. North Dakota which defers to Congress to authorize sates to require remote sellers to collect taxes in a manner that does not unduly burden Interstate commerce; and
Whereas state and local governments are working together to implement a streamlined sales tax system that would simplify definitions, tax rates and tax bases and use 21st Century technology in the collection process; and
Whereas current laws create a competitive disadvantage and great inequities between merchants who sell from traditional "brick- and -mortar" establishments and those who sell from electronic stores; and
Whereas increasing sales on the Internet, and the resulting erosion of sales and use tax revenues, will limit the ability of states and governments and school districts to finance essential public services such as police, fire, emergency medical service, education, social services, infrastructure development, and healthcare; and
Whereas a recent University of Tennessee study estimates that state sales tax revenue losses in 2003 will exceed $10 billion; and
Whereas the Advisory Commission on Electronic Commerce failed to reach a legally required consensus on fair and equitable treatment of both remote sellers and "Main Street" retailers and also proposed that Congress preempt state and local sovereignty guaranteed by the U. S. Constitution:
Therefore be it resolved that ________________ County supports simplification of state and local sales taxes, and urges states to move expeditiously to develop and approve model simplification legislation; and
Be it further resolved that Congress should not extend or expand the current moratorium until its expiration in October 2001; and
Be it further resolved that if state and local governments choose to negotiate a brief extension of the existing moratorium as part of a broader bill, such an extension: