Senate tax panel seeks to streamline remote sales tax compliance

June 14, 2022

Senate Finance Chairman Ron Wyden (D-Ore.) said on June 14th that he is working on legislation that will help simplify the rules regarding remote sale taxes.

“I am very interested in working…to find some common ground…to simplify this. To make sure these transactions…don’t take such a toll on small businesses across America… We’re all going to have to dig in and try to find some way to actually get this simplification in place,” Wyden said.

He also suggested that he would be working on such legislation “in the days ahead” and that the bill would be on a “bipartisan basis.”

The Chairman’s comments came during a committee hearing on the impact of the South Dakota v. Wayfair Supreme Court decision on small businesses and remote sales. In 2018, the Hight Court upheld that out-of-state sellers (aka: remote sellers) are required to collect and remit sales taxes on goods and services.

Since that decision, many small business owners have been left to their own devices in figuring the amount of tax to pay and who should receive it, according to today’s witnesses.

“The current conditions make it excessively complicated and adds major costs and administrative burden as well as fear that we’re not doing something correctly. I know of businesses that have had to close because the administrative complexities and costs were just too much for some business owners,” said Michelle Huie, founder of VIM & VIGR Compression Legwear, who testified before the panel.

John Hennessey, President & CEO of Littleton Coin Company, Inc., a coin collecting company, also testified before the committee. He said that his company has paid over $500,000 in company funds since 2018 to comply with the taxation requirements imposed by the Wayfair ruling.

Hennessey also offered some legislative steps that could address the problems created by the Wayfair decision. They included:

  • Simplify sales tax rates to one rate per state,
  • Create uniform product classifications that is consistent across all states,
  • Provide protections from states seeking to collect retroactive sales taxes,
  • Provide protections from states seeking other taxes from out-of-state businesses, like state income tax collection,
  • Create an audit regime where a single audit is completed for all states instead of states conducting individual audits,
  • Phase-in sales tax changes over one year.

Committee members seemed open to Hennessey’s suggestions. But it remains unclear if legislation will be introduced this year and passage of such a bill in the current Congress is murky at best.

The legislative agenda is already quite full. Also, lawmakers will soon focus on their re-election bids, which makes the passage of bills a second-tier priority.

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