Siddoway, Clow push Internet-tax hike

Siddoway, Clow push Internet-tax hike

by
Dustin Hurst
March 9, 2016
Dustin Hurst
Author Image
March 9, 2016

Two Republican legislators -- including one with significant clout in the Statehouse -- want Idaho to adopt a bill that would significantly hike taxes on Idaho families.

Senate Local Government and Taxation Chair Jeff Siddoway, R-Terreton, and Rep. Lance Clow, R-Twin Falls, want to change Idaho tax code to allow the state to collect sales taxes on many purchases made over the Internet.

But, no one can say how big the tax hike will be, not even the bill’s sponsors.

Idaho code already allows the state to collect taxes on some Internet purchases. Companies with a clear nexus in the state, as defined by the U.S. Supreme Court’s 1992 Quill decision, must collect Idaho’s 6 percent sales tax and remit it to the Idaho State Tax Commission.

A nexus is generally thought of as a physical place of business. Companies without a clearly defined nexus, including online retailers like Amazon.com and others, don’t have to collect or remit sales taxes.

The Clow-Siddoway bill would expand the definition of nexus to include companies with in-state distribution facilities or that conduct marketing, fulfillment or certain other activities in Idaho..

The bill lacks a clearly defined fiscal note, which legislators attach to bills to explain their impacts on state tax revenue. Clow said the bill would incur some costs because the tax commission would need to rework some of its computer systems if the plan becomes law.

Due to the expanded definition of nexus the bill would also cause a tax hike, but Clow said he can’t calculate that number.

“I’m not presenting a number anyone can count on for future revenue in this fiscal note,” he told House Revenue and Taxation Committee members. “But we anticipate there will be some.”

The panel introduced the plan unanimously. It’s uncertain if the bill will receive a full hearing as the 2016 session winds down in the coming weeks.

Idaho Gov. Butch Otter, who has endorsed the Internet sales tax, estimated last year the state could reap more than $80 million in new tax revenue annually through a fully implemented tax on Internet purchases.

Proponents of the idea note that Idaho law, through the Use Tax, already requires Idahoans to remit taxes on Internet purchases. The law, though, requires Idahoans to self-report on their income tax filings each year. Officials believe Idahoans report and pay a small fraction of what state law says they owe.

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