INTERSTATE SALES & USE TAX COLLECTION BILLS INTRODUCED

 February 26, 2013

INTERSTATE SALES & USE TAX COLLECTION BILLS INTRODUCED

On Thursday, February 14, 2013 two bills were introduced that would grant the states the power to force out-of-state vendors to collect the state’s sales/use taxes. The means of implementation would be left to each state.

S-336 was introduced in the US Senate by Sen. Michael Enzi (R-WY).  The bill is titled “To Restore States’ Sovereign Rights to Enforce State and Local Sales and Use Tax Laws and For Other Purposes.”  While the text of this legislation is not yet available, we expect the language to be identical to that of S-1832, which Sen. Enzi introduced in the 112th Congress.   S-336 currently has 19 cosponsors and has been referred to the Senate Committee on the Judiciary.

A companion bill to S-336 was introduced by Rep.  Steve Womack (R-AR) in the US House of Representatives.  HR-684 has the same title as S-336, already has 36 cosponsors, and has been referred to the House Committee on Finance.

Several roadblocks to previous legislation of this type have been eliminated:

1. Software will be available that the states will be able to provide to even small businesses to simplify collection and remittance of sales taxes to ALL states in which clients reside.
2. Any legislation mandating this new responsibility for collecting and remitting sales taxes likely will include a small business exemption based on dollar volume.  However, thresholds that have been discussed to define a small business — $500,000 or $1 million — will not exempt even the smallest mom-and-pop dealer in precious metals, especially with metals markets at current levels.

Unlike previous proposals, sales tax exemptions on coin and precious metals products will still be a state-by-state matter.  Currently 30 states have some form of an exemption on rare coins, precious metals and collectible currency.  Five states have no sales tax at all, but the other 25 exemptions were enacted as a result of efforts by ICTA and in-state dealers who fought to achieve them. 

Many states are reviewing all of their state sales tax exemptions in an effort to raise revenues, which puts all exemptions at risk.  Each state will decide which sales tax exemptions to retain, if any; however, no state will be required to keep an existing exemption of any kind, including those for coin and precious metals products.  There is considerable bi-partisan support – by both Members of Congress and state governors – to enact this type of legislation allowing the collection of sales taxes across state lines.

ICTA urges everyone in states that currently have sales tax exemptions on coin and precious metals products to monitor their state legislature for any attempts to repeal the state exemption.  If this legislation is passed, collectors and investors in states that do not have exemptions will automatically have sales/use tax applied to their transactions, regardless of whether the dealer they purchase from is within their own state or in another state.

We will keep you informed on this issue and let you know when the text of the new bills is available.