Lawmakers Ponder Amazon Tax

Lawmakers on Tuesday considered two items of legislation that would force businesses to collect sales and use taxes on goods sold into Maine over the Internet.

L.D. 346, An Act to Require the Collection of Sales Tax by Any Business Making Sales to Persons in Maine, was introduced by Rep. L. Gary Knight (R-Livermore Falls), the ranking House Republican on the Joint Standing Committee on Taxation.

“This is not a new tax,” said Knight. “This is simply an attempt to collect an existing tax that is not being collected because of the nature of online sales,” he said.

“Maine’s small businesses are losing out to online vendors who don’t have to charge sales taxes,” said Knight.

Knight’s bill would create the presumption that a seller of goods or services is engaged in business in the state of Maine and therefore required to register with the State Tax Assessor as a retailer and collect and remit sales and use tax on purchases made by persons in the state.

Knight’s bill has 9 co-sponsors including Senate President Justin L. Alfond (D-Cumberland) and Senate Minority Leader Roger J. Katz (R-Augusta). Gov. Paul R. LePage has promised to sign Knight’s proposal.

Although Knight supports collecting taxes on online sellers, he does not support a similar proposal that would bring Maine’s tax laws into conformity with a thirteen-year-old national initiative.

L.D. 319, An Act To Provide Tax Fairness to Small Businesses in the State, was introduced by House Majority Leader Seth Berry (D-Bowdoinham) as emergency legislation.

Berry’s bill goes beyond Knight’s by requiring the Bureau of Revenue Services (BRS) to identify changes in sales and use tax laws necessary to conform them to a national effort known as the “Streamlined Sales and Use Tax Agreement.”

The Streamlined Sales and Use Tax Agreement is a multi-state initiative designed to facilitate the collection of sales and use taxes from so-called “remote sellers” who sell goods or services over the Internet.

The cost of implementation is currently unknown as is the amount of taxes that could potentially be collected, according to a spokesman from the Maine Revenue Service.

Utah State Sen. Wayne A. Harper (R-Taylorsville) came to Augusta to testify in favor of the sales tax streamlining initiative. In addition to being a long-time state lawmaker, Harper also serves as the Chairman of the Streamlined Sales Tax Governing Board, Inc. He said the initiative helps states and businesses surmount the difficulty of complying with the thousands of taxing jurisdictions in the states.

Proponents of the E-Tax are up against a decision of the U.S. Supreme Court, Quill Corp. v. North Dakota, which struck down a decision by the North Dakota Supreme Court to collect a use tax on transactions conducted online. In its decision, the Supreme Court ruled that a business must have a physical presence in a state in order for that state to require it to collect sales taxes.

The Court made it explicit that Congress could pass a law overturning Quill Corp. v. North Dakota and, in 2011, U.S. Sens. Richard Durbin (D-Ill.), Michael Enzi (R-Wyo.) and Lamar Alexander (R-Tenn.) attempted to do just that. Their bill, which ultimately did not pass, would have required online sellers like Amazon.com and Overstock.com to collect sales taxes on behalf of states.