Gibbs Introduces Online Sales Tax Bill, Protects Consumers and Small Businesses

January 9, 2019
Press Release

WASHINGTON, DC - In an effort to protect small businesses from the excessive compliance costs of online sales tax collection, Congressman Bob Gibbs re-introduced legislation to set guidelines for states expanding their sales tax to non-nexus online sales.

The Protecting Small Business from Burdensome Compliance Costs Act will give small business out-of-state vendors the ability to remit any sales taxes to just one location per state. The bill will also require states to establish and publish what products are subject to sales tax.

“The Supreme Court’s Wayfair decision leveled the playing field between brick-and-mortar and online retailers,” said Gibbs. “But, as I said last year, too often government action can have unintended consequences. The decision opened the door for the possibility of a complex maze of state and local sales taxes that would be nearly impossible for small businesses to navigate without raising compliance costs and, ultimately, raising the costs of good for consumers. The Protecting Small Business from Burdensome Compliance Costs Act balances the ability of states to collet online sales tax while preventing undue burden on small businesses.”

The 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 01/01/2020 - for states to require collection and remittance of sales tax by out of state sellers.

Text of the bill can be found here.