BOISE — A bill long pushed by Twin Falls lawmaker Lance Clow will get its first chance on the House floor this session, making Idaho the latest state to consider legislation aimed at making sure residents pay sales taxes on online purchases.
HB 578, co-sponsored by Rep. Clow, a Republican, and House Majority Leader Mike Moyle, a Republican from Star, would require some, but not all, out-of-state retailers to collect and remit the state’s sales tax on purchases made by Idahoans. The bill includes retailers that have some affiliation to an Idaho-based seller and that gross at least $10,000 annually in Idaho sales.
Current law already requires Idahoans to pay sales taxes on items purchased online from out-of-state retailers. But it’s the responsibility of the buyer to report and pay these taxes on their income tax returns — something not all people actually do.
The result, Clow and proponents of similar measures nationwide say, is that out-of-state retailers gain an unfair advantage over in-state retailers and brick-and-mortar stores, while the state loses out on revenue.
“We have retailers closing in Twin Falls,” Clow told the Times-News. “We’re losing retail jobs, we’re losing retailers, because of the internet competition. And some of it is very unfair.”
Meanwhile, Clow estimates that his bill could provide the state with an additional $22 million to $37 million per year.
As online shopping becomes increasingly popular, Idaho is far from the first state to consider how best to ensure that due sales taxes get paid. Legislation to address the problem has popped up in states including Pennsylvania and South Dakota, the latter of which filed a lawsuit against three online retailers in the hopes of challenging a 1992 Supreme Court ruling that states could not force mail order catalog retailers to collect sales taxes unless they had a physical presence in that state.
The Supreme Court agreed last month to hear the case, South Dakota v. Wayfair, later this spring. A ruling is expected in June.
Though the 1992 Quill v. North Dakota ruling has not been overturned, several lower court rulings upheld by the Supreme Court in the past decade have “eroded some of the reach of Quill decision,” making it possible for states to require certain out-of-state retailers to collect and remit sales taxes, Clow told the House Revenue and Taxation Committee this week.
The issue has attracted greater national attention in the past several months as a result of the Supreme Court’s decision to hear the South Dakota case. But Clow has been pushing for Idaho to address internet sales taxes for years. This was his sixth attempt to introduce such legislation.
He said his bill, which only includes retailers that have some affiliation to an Idaho-based seller, more closely resembles current laws in New York than the legislation in South Dakota.
“This bill, I believe, stands regardless of what the Supreme Court does,” Clow said.