TO CLARIFY: Morning Tax reported on Monday that one key opponent of federal online sales tax legislation believed that the National Conference of State Legislatures’ estimate that $26 billion worth of sales tax from remote sales weren’t collected was over the top, with a more feasible finding being at most $11.6 billion. But Steve DelBianco of NetChoice, who came up with that projection, believes a more likely figure is $5.2 billion. So in short: Supporters and opponents of allowing states more latitude to force out-of-state vendors to collect sales tax continue to have wildly different projections about how big the problem is.
Also of interest: The Colorado Senate Finance Committee holds a hearing today over a measure to repeal a law that forces out-of-state companies to inform the customers about sales taxes owed, a law that wound its way to the Supreme Court.
The administration’s unique legal theory is “too clever by half,” Steve DelBianco, the executive director of the trade group NetChoice, said in an email Tuesday.
“The Supreme Court said that out-of-state sellers who mailed ‘an avalanche’ of catalogs into North Dakota could not be forced to pay the state’s sales tax,” he said of the 1992 decision. “So how in the world can Massachusetts deny that this ruling applies to e-retailers, who merely post a website that may be requested by Massachusetts consumers?”
DelBianco expressed hope that “state lawmakers will realize this DOR directive is headed in the wrong direction, by inviting lawsuits while bringing in no new tax revenue.” The administration has projected the tax will bring in $30 million a year in additional revenue.
The reference to litigation is likely no idle threat on the part of NetChoice. The organization has brought lawsuits in South Dakota and Tennessee against similar taxes implemented by those states in recent years. South Dakota was forced to file lawsuits against three major retailers, including Boston-based Wayfair, after they did not register with the state to collect sales taxes.
Asked if NetChoice was prepared to sue Massachusetts, DelBianco indicated that if that group did not, someone else could. “Too soon to say whether we would be the ones to sue Massachusetts,” he said. “We have lawsuits in progress already in South Dakota and Tennessee, and there are plenty of potential plaintiffs to go around.”