Senate Approves Non-Binding Budget Amendment Supporting Imposition of State Use Tax Collection Requirements on Remote Sellers, But Genuine Simplification Still Sorely Needed

On Friday, March 22, the United States Senate approved a non-binding amendment to the Senate budget resolution, by a vote of 75-24. The non-binding amendment expresses support for the adoption of a federal bill authorizing states to impose use tax collection obligations upon out-of-state retailers without regard to whether the retailers have a physical presence in the state. The Senate did not vote on an actual bill specifying the terms on Congressional authorization for expanded state use tax collection authority.

E-commerce vendors and other remote sellers interested in the legislation should contact their representatives in Congress to ensure that any federal bill considered for adoption guarantees meaningful uniformity and simplification of existing state sales and use tax systems. The bill currently before Congress, the so-called Marketplace Fairness Act, fails to include fundamental simplification measures, such as requiring one tax rate per state and uniform tax bases and exemptions, providing for vendor compensation, implementing consistent and coherent sourcing rules for products and services, and harmonizing state sales tax holidays. Readers can find out more about true sales and use tax simplification here.

We will continue to follow developments on federal legislation.