Addresses Simplification
THE ISSUE Compliance under the current sales and use tax systems is extremely difficult. Currently, 45 States and the District of Columbia impose sales and use taxes on the purchases of goods. Within many states, local governments also impose sales and use taxes, resulting in approximately 7,500 disparate tax jurisdictions in the United States. States must dramatically simplify their existing sales and use tax systems before collection obligations are expanded. This includes simplicity and uniformity in tax rates, administration, definitions and classifications. Extending the current moratorium without addressing the issue of sales and use tax simplification financially threatens our businesses and communities.- The complexity of state sales and use tax systems imposes significant compliance burdens and costs on retailers. States that expect others to collect their taxes for them must provide and maintain mechanisms to compensate for those efforts. Under any scenario, retailers must be compensated for acting as a state's collection agent. Studies show that retailers bear a significant cost in collecting state sales and use taxes.
- States have formed their own initiative, the "Streamlined Sales Tax System Project," a cooperative effort with local governments, to radically simplify the sales and use tax system.
- The current system places an unfair burden on the traditional brick-and-mortar retailer who is forced to collect taxes on behalf of the states. However, once simplified, all retailers should have the same collection obligations, regardless of the delivery channel.
- Over 30 states have already passed legislation or gained a Governor's executive order to simplify their sales and use tax system. Congress must now provide them the authority to expand their collection authority if states agree to simplify their sales tax systems.
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