Simplified sales tax studied

Nevada legislators are considering a bill that would commit Nevada to a nationwide system to simplify sales and use tax in order to make it easier to collect taxes on products sold over the Internet.

Assembly Bill 514 paves the way for Nevada to sign onto a multi-state agreement for a Streamlined Sales Tax System.

So far, seven states have passed legislation to do so.

At least 10 states, representing 20 percent of the nation's total population, must approve the agreement, with an effective date of Jan.

1, 2003, before the United States Congress will approve the interstate agreement it requires.

The plan got a big boost recently with the addition of two key states.

"Initially California and New York were not members," said Dino DiCianno, deputy director in the state's tax department, testifying before the Assembly Committee on Taxation.

"But they are now becoming members and with California and New York aboard I don't need to tell you the weight that will hold with Congress."

The streamlined system would greatly simplify the sales tax structure, which now varies widely from state to state, so that participating states could more easily collect sales tax.

Internet-based retailers are not required by law to collect sales tax outside their jurisdiction, according to the Streamlined Sales Tax Project.

But the project's proponents think a simplified system would encourage the online merchants to begin collecting taxes.

"A lot of Internet sellers are coming forward to pay tax on their own," said Mary Lau, executive director, Retail Association of Nevada, testifying in favor of the bill.

"They see the handwriting on the wall."

The bill received kudos from others in the business community, too.

"In the long term, this will be the most important bill to come out of this session," said Ray Bacon, executive director, Nevada Manufacturers Association.

Meanwhile, Sen.William Raggio (RReno) introduced a bill last week that would require the state's tax department to keep track of Internet sales and retailers.

"We're hearing a lot about e-commerce," said Raggio, testifying before the Senate Committee on Taxation on Senate Bill 314.

"California just enacted a law to impose sales and use tax on ecommerce.

Indeed, Nevada may join a movement," he said, referring to the Streamlined Sales Tax System.

But, we have been relying on data collected by private researchers, which may be significantly overblown, he said.

Raggio said some estimates predicted Internet sales would reach $87.5 billion in 2002 and $127.4 billion this year.

"But according to the Department of Commerce, they were $25.6 billion in 2002, much less than the study said," he said.

Chuck Chinnock, executive director, Nevada Department of Taxation, said the department would need to hire a consultant to collect the data because the department didn't have the expertise in house.

"We support the bill," said Chinnock.

"We think it's smart since we're looking at the Streamlined Sales and Use Tax."

"It isn't a bill of great consequence," said Raggio.

"But we may need the data before the next session."

The Streamlined Sales and Use Tax system would be effective in 2006, giving the legislature one more session to finalize legislation that would let the state participate.

"Before we rush down the road to taxation," said Raggio, "we should make sure we have relevant data."