Online sales tax windfall for state?

Just about a year ago, the state Department of Revenue pointed hopefully to the introduction in Congress of a bill that would require online retailers to collect sales taxes and funnel the revenue to their customers’ home states. The measure could generate hundreds of millions of dollars a year for state and local governments in Washington, the department said. Legislators, including Rep. Ross Hunter of Medina, praised the bill.

The idea is still alive – and now Gov. Gregoire is calling on Congress to approve the proposal as part of the negotiations to avoid the so-called fiscal cliff.

 

If enacted, the federal Marketplace Fairness Act could provide the state with an extra $560 million in sales-tax revenue in the 2013-15 biennium, the revenue department estimates. Local governments would take in an extra $175 million in the same period. Those amounts would increase significantly in subsequent biennia as compliance improves and online sales grow.

 

Washington could start collecting taxes within 90 days after a congressional OK because Washington is one of 24 states to adopt the Streamlined Sales and Use Tax Agreement. The Legislature authorized that in 2007.

 

The federal act would set aside a 1992 U.S. Supreme Court decision that excused online retailers from collecting sales taxes from customers who live in states where the retailer lacks a physical presence. Supporters of the bill say it would level the playing field for traditional brick-and-mortar retailers who must collect state and local taxes on sales in their stores.

 

But although the bill enjoys bipartisan support, at least one congressman from Washington state is skeptical of its chances in this year’s lame-duck session.

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