
New Study Finds Consumers Want Online Sales Tax Collection
A new poll commissioned by the International Council of Shopping Centers found yesterday that consumers want online merchants to collect sales tax.
The bill they were asking people about is H.R. 2775, the Remote Transactions Parity Act of 2015 (RTPA). This bill was introduced in June 15 by Jason Chaffetz (R-UT) and Steve Womack (R-AR). The House bill is similar to the Senate’s Marketplace Fairness Act. The bill would require all remote merchants — that is, online stores — to collect sales tax based on the tax jurisdiction of the buyer. This would simplify the problem of how to collect sales tax when different jurisdictions may use the location of either the buyer or the seller.
The bill also includes provisions that respond to some of the problems seen in the Marketplace Fairness Act was:
- It limits audits of remote sellers.
- It requires states to provide sales tax software free of charge.
- It provides a transition period for small businesses, which were not required to collect taxes under previous versions of internet tax collection bills.
The International Council of Shopping Centers claims that 70% of consumers are for this bill, up from 63% in 2013.
Other results from the study:
- 80% think it would be easier to have online sellers collect sales tax than to require consumers to keep track of it and report it, something which most consumers currently do not do even though they are required to do so.
- More than half think it’s unfair that brick and mortar stores have to collect sales tax on all their transactions and online sellers do not.
- 90% think local retailers are important for the economy of the communities where they live.
We have to notice that the International Council of Shopping Centers is clearly not an unbiased source, that they’re not sharing their research but only their self-selected headlines, and that they’re asking emotional questions. We also have to note that the ICSC has actually been used as an example in a textbook discussion of manipulative survey design.
So maybe it isn’t exactly true that consumers want to pay sales tax on their online purchases. But that might not be the right question.
Consumers are required by law to pay sales or use tax on their purchases, even if it isn’t collected by merchants. Consumers who want to pay sales tax on their online purchases — that 70% ICSC is touting — can do so. Many states now have a line on their income tax forms where consumers can do this with ease. There is nothing stopping consumers from paying this tax.
Hardly any do so.
The question is probably whether state and local jurisdictions want to deal with collecting sales taxes on remote purchases. Doing so with any significant level of compliance and efficiency would require more consistent sales tax laws from one jurisdiction to another. Right now, cities, states, and counties can use sales taxes to collect revenue for specific purposes and they can change those taxes as their circumstances change. That may not be something they want to give up.
Without more uniform tax rules, having remote sellers collect taxes in state where they do not have nexus may just be replacing one unenforceable law with another unenforceable law.
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