Arkansas House passes bill to make online sellers notify buyers of tax due

Online retailers such as Seattle-based Amazon.com Inc. would have to send Arkansans a notice of how much sales tax they owe for their online purchases under legislation approved Tuesday by the House.

In addition to similar legislation passed by the Senate on Monday, House Bill 1388 is an attempt to recoup sales tax revenue that is now lost to a growing online sales industry, said the sponsor of the bill, Rep. Dan Douglas, R-Bentonville.

Amazon, one of the largest online retailers, applies sales tax to purchases made in 38 states, but Arkansas is not one of them. Douglas' bill would apply to all retailers operating outside the state.

Despite opponents labeling the bill a tax increase, the House passed the measure on a 54-to-26 vote.

The bill would have sellers notify buyers during online checkout that they owe and must report their sales tax. If sellers do not immediately collect the tax, they must send notices before tax season to the state listing all the purchases made by a buyer and how much tax he owes.

Buyers then would have to report and pay their taxes to the state, or they could be charged with tax evasion, Douglas said. Sellers that fail to report purchases made in the state would be subject to fines.

Douglas said his bill is a companion to Senate Bill 140, which the upper chamber passed Monday. The House bill is based on legislation that was passed in Colorado and survived a court challenge, while the Senate bill is based on a South Dakota law that has yet to be tried in court, he said.

The Senate bill would require online retailers to collect sales taxes from Arkansans and remit the receipts to the state, but if that bill is passed and struck down, the state could fall back on the House bill, Douglas said.

"We've seen what the budget is," Douglas said. "If you want to fund pre-K, you have to vote for this, if you want to fund highways, you could vote for this bill, if you want to do tax cuts, here's the money."

Rep. Kim Hendren, R-Gravette, said lawmakers should expect to have to explain to their constituents why they voted for a "tax increase," and pay the political price.

HB1388 now moves to the Senate for consideration, while SB140 has been referred to the House Revenue and Taxation Committee.

A Section on 02/08/2017

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