ONLINE SALES tax bill sent to House.

Measure advances to House after amendment is rejected

A bill aimed at persuading out- of- state companies without a physical presence in Arkansas to collect taxes on their sales to Arkansans and pay the money to the state cleared the House Revenue and Taxation Committee on Thursday.

Senate Bill 140 by Sen. Jake Files, R- Fort Smith, had failed to get the 11 votes required to escape the 20- member committee during three previous tries in the past month and a half, but the committee expunged the previous votes.

In a voice vote, the committee recommended House approval of the bill. The committee first rejected an amendment proposed by Rep. Reginald Murdock, D- Marianna, to earmark $ 125 million of the increased revenue for highways and other programs. The proposed amendment fell one vote short of the 11 required for approval. The committee includes 10 Democrats and 10 Republicans.

Files has estimated that SB140 could increase state tax revenue by up to roughly $ 100 million a year, while state officials have said they don’t know how much the bill would raise in additional tax revenue. It is backed by Wal- Mart Stores Inc., the Arkansas Homefurnishings Association and the Arkansas Municipal League, and opposed by the Americans for Prosperity and the Conduit for Action conservative groups.

“This is a tough bill and has the opportunity to probably have the most impact of anything we do down here for all of our local businesses and for cities and counties as well as the state,” Files told the House committee.

He said Amazon has agreed to collect sales taxes in each state that has a sales tax, so questions about the constitutionality of his bill “probably” has been addressed with that as well. Four days after the Senate approved SB140, Amazon announced Feb. 10 that it would start collecting taxes in the state on March 1.

“This [ bill] gives an opportunity to levelize the playing field for our local mom- andpop businesses and to continue to do what is right by the people of Arkansas,” Files said.

But House Democratic leader Michael John Gray of Augusta said many people will see the bill’s method of sales tax collection “as a new tax to them.”

“I have some real concern that will be disproportionately felt by … the lower- income parts of our community versus the cuts to income taxes [ enacted by the Legislature in recent years]. It seems like we’re finding a new method to collect sales tax to make up for gaps that we’ve created by reductions in income tax,” Gray said.

SB140 would require the Arkansas Tax Reform and Relief Legislative Task Force to review arkansasonline. com/ legislature

the amount of money that would be raised by the measure and recommend to lawmakers how to use the funds, including further income tax cuts or funding programs.

Files said the task force is going to look at taxing methods and try to make the state more competitive.

“This is a not a new tax. Although we get the emails that talk about a new tax, the taxes are currently due [ as a use tax],” he said. Use taxes are sales taxes levied on goods and services delivered for in- state use. “While I do share your concern that it is perceived that way at times, I wouldn’t have picked it up if it was a new tax. I don’t think anybody at this table would have either.”

Files has said SB140 mirrors a South Dakota law now before that state’s Supreme Court.

SB140 states that the U. S. Supreme Court should reconsider its doctrine that prevents states from requiring remote sellers to collect use taxes. “It is necessary for this state to pass a law clarifying its immediate intent to require collection of sales and use taxes by remote sellers and permitting the most expeditious possible review of the constitutionality of this law,” the bill says.

It would require out- ofstate companies not physically here to collect taxes based on its sales to Arkansans if the seller’s gross revenue from those sales exceeds $ 100,000 or it had at least 200 transactions for delivery into Arkansas in the previous or current calendar year.

If these companies don’t collect and remit these taxes, SB140 would require them to report each year to the Department of Finance and Administration the name and address of each Arkansas purchaser and the total amount paid, and provide notice to each Arkansas purchaser that the information has been provided to the state.

Files has estimated that SB140 could increase state tax revenue by up to roughly $ 100 million a year, while state officials have said they don’t know how much the bill would raise in additional tax revenue.