Legislation that could boost state revenues by as much as $37 million passed the Idaho House on a 46-21 vote Friday.
Sponsored by Reps. Lance Clow, R-Twin Falls, and Mike Moyle, R-Star, the measure requires out-of-state retailers to collect and remit the state sales tax on sales to Idaho residents, under certain conditions.
The bill attempts to address the growing influence of e-commerce. Opponents deride it as a legally tenuous money-grab, but supporters say it creates a level playing field between online retailers and the brick-and-mortar stores that contribute taxes, provide jobs and form the backbone of many Idaho communities.
“It’s time for these (online) retailers to play their proper role in our economy,” Clow said.
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The bill establishes a nexus or connection with any retailer that has some sort of affiliation with an Idaho-based sales agent or business — such as a link on their website — and that has gross sales of more than $10,000 to Idaho customers in a year.
Establishing that nexus, Clow said, gives Idaho the legal jurisdiction it needs to require the businesses to collect and remit the 6 percent state sales tax.
Moyle noted that this is not a new tax on Idaho consumers. The tax is already due; this bill simply shifts the collection and reporting responsibilities from individual consumers to the retailers.
“This is a good bill,” he said. “The boogeyman isn’t in it.”
Others weren’t so certain. For example, Rep. Priscilla Giddings, R-White Bird, wondered if Clow’s bill was getting too far ahead of the U.S. Supreme Court.
The court has ruled on a number of nexus lawsuits in recent years, and has agreed to take up another case this summer dealing with a law requiring all retailers with sales in excess of $100,000 to South Dakota residents to remit the state sales tax.
Clow noted that the South Dakota law tries to create a straight “economic nexus” with retailers. His bill, by contrast, focuses solely on retailers who are affiliated with businesses located in the state.
This “affiliation nexus” already has passed Supreme Court scrutiny, he said, based on the court’s decision to let stand a 2013 lower court ruling involving New York and Amazon.
Despite this explanation, Giddings recommended holding off on the bill.
“From my understanding, I think it would be hasty for us to make a decision before the Supreme Court rules (in the South Dakota case),” she said.
The bill now goes to the Senate for further action.