Gibbs Bill on Online Sales Tax Protects Consumers, Small Businesses

September 7, 2018
Press Release

WASHINGTON, DC - After the Supreme Court’s Wayfair decision in June making it easier for states to mandate collection of tax for online sales, Congressman Bob Gibbs introduced legislation that will ease the burden for online vendors to comply with any new online sales taxes.  Considering input from local businesses who could be severely impacted by the ruling, Gibbs’ bill will set guidelines for states seeking to expand their sales tax to online sales for which no nexus exists.

The Protecting Small Business from Burdensome Compliance Costs Act will reduce the administrative burden of these taxes by giving out-of-state vendors the ability to remit any sales taxes to a single location.  Additional provisions require states to establish and publish what products are subject to sales tax.

“I’ve heard from many retailers and businesses in my district who conduct a good deal of business online,” said Gibbs. “While the Supreme Court’s ruling levels the playing field, it is another example of a government action having unintended consequences.  The Wayfair decision opened the door for a complex web of state and local sales taxes that would be impossible for small businesses to navigate.  Complying with a needlessly convoluted tax structure will raise prices for consumers. My bill balances the rights of states to collect tax on online sales while protecting consumers and small businesses from facing an undue burden.”

Main provisions of the bill include:

  • States cannot retroactively collect sales tax for previous interstate sales where no nexus existed.
  • States that want to collect sales tax from out of state vendors who do not have a nexus, must enact legislation that:
    • Provides a statewide uniform tax rate that cannot be higher than the highest combined rate of all local and state taxes.
    • Permits out of state vendors to remit sales taxes to one location.
    • Provides a statewide uniform provision for what is taxable.
  • Vendors that have nexus operate as they currently do.
  • This legislation would establish a “Start Date” - not before 01/01/2019 - for states to require collection and remittance of sales tax by out of state sellers.

Text of the legislation can be found here.