Debate on internet sales tax bill set for Tuesday

The first item on the Legislature’s agenda for Tuesday is second-round debate on LB 44 – which relates to the collection of sales taxes on online purchases.

The bill stalled last session because of concerns regarding constitutionality. Lawmakers on Tuesday will consider an amendment that been offered to address those issues.

In a recent edition of the Nebraska Law Review, University of Nebraska Law Professor Adam Thimmesch wrote, “There seems to be no legal reason for the state to not enact LB 44, as amended.”

Most notably, the amendment would remove the requirement that sales taxes be remitted by businesses that have $100,000 in sales or 200 transactions. Rather, these companies must instead provide detailed notifications to purchasers about the state sales tax that is due for their purchases. The requirement that businesses remit sales tax would go into effect should the U.S. Supreme Court rule to overturn Quill Corporation vs. North Dakota, a lawsuit that presently prevents states from collecting sales taxes owed from online purchases made from companies that don’t have physical locations in the state.

The amendment to LB 44 also:

·        Requires companies to report aggregate sales to the state, alleviating privacy concerns that were initially raised by the bill’s previous requirement to report on individual sales;

·        Exempts all Nebraska businesses and all small businesses from the requirements of LB 44; and

·        Leaves the state in position to collect revenue immediately should the Supreme Court rule overturn the Quill lawsuit. Failing to pass a bill this year would mean the Legislature would have to wait until next session to put a system in place to collect online sales taxes.

Legislative debate is set to begin at 9 a.m. on Tuesday. NET Nebraska will stream debate live.