Nathan Moore's Thoughts
Volunteer Taxation
Yeah, this worked great under the Articles of Confederation
The Tennessee Department of Revenue is encouraging online retailers to begin collecting sales tax for the state two years ahead of the deadline for them to do so.
The state delayed implementation of the streamlined sales tax initiative until 2007 after retailers complained about increased paperwork. Nevertheless, a multistate agreement to move to the system took effect in October, and retailers are being reminded of that.
“We are encouraging online retailers to collect our tax and seek amnesty from past non-collection,” Revenue Commissioner Loren L. Chumley said.
I’m still not sure whether sales tax collections on out-of-state sales are legal under commerce clause case law (yet another worthy law suit). I must be honest and reveal that I haven’t been following it closely, but I would think that such a case would certainly cross my radar. Regardless of that, the Commissioner of Revenue is asking retailers to focus their charitable efforts toward the government.
I love the State of Tennessee, and cannot imagine leaving her, but I will never, ever offer her more tax revenue than she is owed. It is not seemly for a lady of her stature to consume so much.
December 3rd, 2005 at 12:46 am
The Streamlined Sales and Use Tax Agreement is not without its problems, but I think you misunderstand the scheme. The State is not trying to get more than its fair share. The “extra” monies collected will be remitted to the rightful owner/State.
Under the new Streamlined Legislation that is set to take effect in Tennessee on July 1, 2007, Tennessee retailers are under NO obligation to collect the sales tax on behalf of states in which it has no physical presence, so where’s the potential Commerce Clause issue?
The Streamlined Legislation mostly just standardizes definitions and sourcing rules. However, the Streamlined Legislation also offers an incentive to retailers to voluntarily collect the tax – amnesty on past uncollected taxes.
As a side note, many TN taxpayers think that they “get out of” paying sales tax by purchasing expensive goods (e.g., engagement rings) and various online goods out of state. What they don’t realize is that there is a companion tax called the use tax that they are legally required to pay for the privilege of brining that item back to Tennessee – and it just so happens that the use tax is equal to the sales tax that would have been owed to the State had the purchase been made in Tennessee.
So, having out of state retailers buy into this Agreement is going to be good for TN (and all other participating states). Out-of-state retailers that voluntarily participate will remit money to the State that the State should have been receiving anyway.
I’d be interested to read your follow-up comments once you’ve had time to familiarize yourself with the SSTA, Tennessee’s sales and use tax scheme, and the pending Streamlined Legislation.