BOISE • A divided House committee voted Tuesday to introduce a bill to prepare Idaho for inclusion in a group of states that have simplified and aligned their sales tax codes.
Twenty-four other states are part of the Streamlined Sales Tax Governing Board. The group has been aligning tax codes in response to federal court rulings that say states can’t force out-of-state sellers, who don’t have a physical presence within a state, to pay sales tax when they sell something to someone within the state.
As online sales that often fall into this category become a bigger and bigger share of total sales, the number of sales that aren’t charged sales tax continue to balloon. Idahoans who buy things from companies, such as Amazon, that fall into that loophole are supposed to report those purchases on their state income tax returns, although many people don’t.
“This bill does not propose to change what we tax, what we do not tax and at what rate we tax anything,” said sponsor Rep. Lance Clow, R-Twin Falls, who has been interested in the issue for years.
Clow introduced online sales tax-related legislation in 2013 and 2014. The bill didn’t make it out of the House Revenue and Taxation Committee in 2013. In 2014, it passed the House but didn’t make it into law. Former Rep. Leon Smith, R-Twin Falls, backed similar legislation before Clow.
If Clow’s bill were to pass, it would cost the state $279,000 in 2015-2016 — $20,000 to apply to join the Streamlined Sales Tax and Use Governing Board, the rest in software changes.
In 2016-2017, though, the state would only have to pay $6,000 in dues and would collect an estimated $1 million to $3 million in additional sales tax from those retailers that are voluntarily taking part in the movement.
Were Congress to pass the proposed Marketplace Fairness Act, Idaho would get an estimated $30 million to $50 million yearly sales tax boost.
The Revenue and Tax committee voted 9-6 to print Clow’s bill. Rep. Mike Moyle, R-Star, who voted “No,” said he didn’t see any reason for Idaho to do this.
“The fact is, until the U.S. Congress acts, we can’t collect the tax,” he said. “And I hate the idea of changing our state statutes to match what someone else says we have to do.”
The Marketplace Fairness Act was reintroduced into Congress about a week ago. It has passed the Senate in the past, but not the House. Supporters, who include major business groups, see it as a fairness issue for brick-and-mortar retailers who have to charge sales tax. Opponents counter it would be a burden on small businesses and would, effectively, raise taxes.