Following several cash-strapped states passing laws dubbed the “Amazon Tax” where online retailers with affiliates in a state are considered a physical nexus and have to collect sales tax, those online retailers terminated thousands of affiliate. This resulted in states gaining no additional sales tax revenue, driving some companies across the border, and reducing the income of their citizens. Now, US Senator Dick Durbin (D-Illinois) wants to take the “Main Street Fairness Act” to the federal level. The more surprising part? This is what Amazon has been asking for and supports the Senator’s proposal.
Arkansas, California, Connecticut, Illinois, New York, North Carolina, Rhode Island, and Vermont have all passed similar laws requiring online retailers to collect sales tax if they have affiliates within the state. You can see the proposed bill at the streamlined sales tax website (.pdf). According to the press release from Senator Durbin’s website, the overall objective of the Main Street Fairness Act seems to be to make collecting taxes less taxing.
The Main Street Fairness Act would not require a single penny in additional taxes to be paid that are not already owed. Instead, the legislation would:
- Certify the Streamlined Sales and Use Tax Agreement;
- Provide states who choose to use it with the clear authority to require retailers to collect sales taxes already owed;
- Require the Streamlines Sales and Use Tax Agreement to meet a lengthy list of simplification requirements to ease administrative burdens for sellers;
- Exempt small businesses (as defined by the Governing Board of the Agreement) from collecting sales taxes;
- Compensate retailers for startup administrative costs associated with collecting sales taxes;
- Treat all retailers equally regarding sales tax collection;
- Release consumers from their existing sales tax remittance obligations; and
- Help states and localities collect billions in taxes that are already owed.
The Act would make sales tax less burdensome on retailers to collect thanks to the Streamlined Sales Tax and it would remove the responsibility of citizens to annually report their owed sales tax.
You can read the letter from Amazon (.pdf) stating their support to Senator Durbin while mentioning the reasons why they believe the current system is overly complex and an unfair burden to interstate commerce.
With a lawsuit against the state of Illinois for the Main Street Fairness Act and this bill being introduced by the Assistant Majority Leader in the Senate, I wonder which will finish first and I wonder if Amazon would reinstate its Associate program to states that choose to adopt the proposed bill. Only time will tell.