Zakrzewski testified today before the House Judiciary Committee's Subcommittee on Commercial and Administrative Law during a hearing on H.R. 3396, the Sales Tax Fairness and Simplification Act of 2007.
Sponsored by subcommittee member Representative William Delahunt, D-Mass., the bill would allow states that have implemented the Streamlined Sales and Use Tax Agreement (SSUTA) to require that out-of-state “remote seller” merchants collect sales tax on merchandise sold to residents of their states. Retailers would be compensated for the cost of sales tax collection, and collection could be outsourced to certified service providers. Retailers with less than $5 million in annual gross remote sales would be exempted.
Under a 1992 U.S. Supreme Court ruling, remote sellers are only required to collect sales tax from customers in states where they have a physical presence such as a store, office or distribution center. With more than 7,600 state and local jurisdictions collecting sales tax, many with different rates, different lists of taxable items and different definitions, the court held that out-of-state merchants could not be expected to know what to collect.
The SSUTA simplifies many aspects of sales tax law and creates a mechanism for collection and distribution. The agreement went into effect on a voluntary basis in 2005 but passage of federal legislation is needed before sales tax collection can become mandatory. NRF, which represents both traditional retailers and remote sellers, helped craft the agreement.
National Retail Federation
marketing@alchempro.com
