E-Commerce Tax Panel Wants More Public Input

As it prepares for its third public meeting on electronic commerce and Internet taxes, the Advisory Commission On Electronic Commerce is again asking the public for suggestions on how to make state and local tax collectors happy without stifling the Internet’s growth.

The group, formed by a Congressional mandate in June, conducted a similar public inquiry before it gathered last month in New York City.

This round of public comment begins with written proposals that will be reviewed by the committee before its scheduled December 14-15 meeting in San Francisco, California. Based on the written submissions, the commission plans to ask some of the authors to participate in the meeting.

The Advisory Commission is charged with examining every aspect of Internet commerce, including at least a cursory review of international policy and the impact that online sales have on municipal revenue streams. The commission is taking a light-handed approach to international policy because, as a strictly domestic U.S. group, it has no practical bearing on international rules.

The Commission must report its findings and recommendations to Congress by April 21, 2000.

Voicing Opinions

While the group has already devised a set of related issues that must be resolved to ensure that interstate electronic, mail order and storefront merchants compete fairly, it is looking to the public for proposals to simplify state and local sales and use taxes. Commissioners have already proposed numerous ideas, which may be amended or altered based on the public comments.

The commission plans to evaluate proposals based on nine basic criteria: Simplification, taxation, burden on sellers, discrimination, international policy, technology, privacy, local government autonomy and constitutionality.

If the commission ultimately decides to recommend a streamlined system for the collection of sales and use taxes, such a system will be evaluated in the context of these issues. For example, the proposal must “fundamentally simplify the existing system of sales tax collection,” by establishing a single rate for each state, clarifying standards and definitions or making other changes.

In addition, proposals must specifically explain how it addresses taxation of electronic commerce and how any proposed tax would affect consumers and out-of-state businesses.

Whether or not the proposals include taxes for electronic commerce, the commission also wants them to also address how the sales tax accounting burden for merchants can be simplified. In addition, the proposal must not discriminate between sales channels and a business’ base of operations.

On the technology end, any proposed taxation system must use “widely available software to enable tax collection” and must explain how much such a system would cost to implement and maintain. Proposals are due November 15th.