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House’s 7 Principles for Internet Sales Tax Bill

House Judiciary Committee Chairman, Bob Goodlatte, (R-Va.) released seven principles for devising an Internet Sales Tax Bill on September 18.  This is a follow-up to the passage of the Senate legislation in May of 2013.  In a press release, Goodlatte said, "The aim of the principles is to provide a starting point for discussion in the House of Representatives."

The Seven Principles
1. Tax Relief – Using the Internet should not create new or discriminatory taxes not faced in the offline world. Nor should any fresh precedent be created for other areas of interstate taxation by States.
2. Tech Neutrality – Brick & Mortar, Exclusively Online, and Brick & Click businesses should all be on equal footing. The sales tax compliance burden on online Internet sellers should not be less, but neither should it be greater than that on similarly situated offline businesses.
3. No Regulation Without Representation – Those who would bear state taxation, regulation and compliance burdens should have direct recourse to protest unfair, unwise or discriminatory rates and enforcement.
4. Simplicity – Governments should not stifle businesses by shifting onerous compliance requirements onto them; laws should be so simple and compliance as inexpensive and reliable as to render a small business exemption unnecessary.
5. Tax Competition – Governments should be encouraged to compete with one another to keep tax rates low and American businesses should not be disadvantaged vis-a-vis their foreign competitors.
6. States’ Rights – States should be sovereign within their physical boundaries. In addition, the federal government should not mandate that States impose any sales tax compliance burdens.
7. Privacy Rights – Sensitive customer data must be protected.

Lacking Guidance?
While we applaud that the House is providing some movement on this issue of clarification, there is still much left unsaid.  How to enact such a bill remains uncertain.  The government continues to take a one-sided, broad brush approach to the taxation of non- “brick & mortar” businesses.  Why, for example, should their tax burden be equal to that of a business utilizing local infrastructure?  As the months progress, it will be important to keep a watchful eye on these developments.

How Can We Help? 
Allyn’s tax team is staffed with seasoned tax professionals experienced in all aspects of multi-state and local tax compliance and consulting for large US and global corporations.  We use that experience to your advantage.  Contact us and we can provide a customized cost-effective solution to meet your company’s needs.  For further information on Allyn Tax services, please contact: tax@allynintl.com.

 

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