Wednesday, March 17, 2010
“Amazon Tax” Bill Heard in Senate
The Senate Budget and Taxation Committee heard a bill that would require out of state vendors to collect Maryland sales and use tax from sales made to Maryland customers if they advertise with Maryland businesses and at least $10,000 in annual sales are referred by the advertising.
The Maryland Chamber opposes this bill for the following reasons:
Streamlined Sales Tax is Preferable: We understand that Maryland based businesses face significant competition from out of state vendors that sell goods through the Internet. We also fully appreciate the State’s current budget gap and the significant amount of sales tax that could be collected from remote vendors if constitutionally valid nexus existed. For those reasons, we have supported legislation to move Maryland toward adoption of the Streamlined Sales Tax Agreement. That agreement rationalizes and standardizes tax laws among the states so that businesses can manageably collect sales and use taxes across the country.
Litigation – Not Revenues: In contrast, this bill would attempts to force out of state vendors to collect Maryland’s sales and use tax while making none of the standardizing changes to our tax law. It is an attempted end run around the constitutional requirement that a vendor have a physical presence in Maryland in order to be subject to the sales tax. Such a law would be litigated for years by out of state vendors, as is the case in New York. National vendors will cancel contracts with Maryland affiliated businesses (as they have done in Colorado, North Carolina and Rhode Island), while litigating any attempted imposition of the tax. The fiscal note on this bill is highly speculative – a projection based on another state’s projection - and unlikely to be realized.
Does Not Level the Playing Field: If legislation such as this is enacted in other states, it would subject businesses making interstate sales to the sales tax laws of over 8,000 states and localities – each with their own tax rates, exemptions and compliance requirements. Such a law would lead to similar burdens being placed on Maryland businesses when engaging in interstate commerce. The result would be fewer companies willing to sell goods on an interstate basis. This bill is bad for Maryland businesses
For more information, contact Ron Wineholt at .(JavaScript must be enabled to view this email address).
