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By: Philip Conneller of Casino.org

A long-rumored congressional hearing on sports betting was finally confirmed Thursday and penciled in for next Tuesday, September 27.

Rep. Jim Sensenbrenner (R-Wis.), chairman of the House Subcommittee on Crime, Terrorism, Homeland Security and Investigation, will lead the hearing, “An Examination of Sports Betting in America.”

Specifically, the subcommittee will examine whether a “basic federal framework is necessary to guide states’ new gambling policies.”

Speaking to press Thursday, Sensenbrenner made no mention of working on actual legislation to regulate sports betting federally. Instead, there is a feeling that Congress could provide a framework of guidance to promote uniformity among states who opt to regulate.

"My subcommittee will look at the implications of this SCOTUS ruling and talk about what it means for the integrity of sports as well as what sorts of improper or illicit activities could arise,” said Sensenbrenner."

This chimes with the view of Senate Minority Leader Chuck Schumer (D-New York), who last month declared it was “incumbent on the federal government to take a leadership role and provide the necessary guidance to prevent uncertainty and confusion for the leagues, state governments, consumers and fans alike.”

Senator Hatch’s Plan

In May, the US Supreme Court struck down PASPA, the federal law that prohibited states from regulating sports betting within their own borders, calling it a “direct affront to state sovereignty.”

“Congress can regulate sports gambling directly, but if it elects not to do so, each state is free to act on its own,” declared the SCOTUS majority.

Sen. Orrin Hatch (R-Utah) has vowed he will do just that. He believes Congress cannot permit sports betting to “proliferate amid uneven enforcement in a patchwork race to the regulatory bottom.”

In late August, he promised to submit federal legislation regulating sports betting to the Senate “within weeks.”

Hatch can be forgiven for taking it personally. He was one of the authors of PASPA — and it’s got to smart to see your work shot down in flames by seven Supreme Court judges.

And speaking of Supreme Court judges, Hatch has good reason to have put his bill on the backburner this week. The senator has devoted much of his energy to defending President Trump’s pick for the Supreme Court, Brett Kavanaugh, who Democrats have been interrogating about gambling habits, among many other things.

In League with the Leagues

The major sports leagues are all for federal intervention. They’re alarmed by the rapidity with which states have fast-tracked sports betting regulation since the SCOTUS decision with barely a thought for their naked self-interest.

"As legalized sports betting spreads across the states, there is a need for consistent, nationwide integrity standards to safeguard the sports millions of fans love,” said the NBA, PGA, and MLB said in a joint statement in support of Schumer.

A federal framework would mean the leagues’ lobbyists would only have to win the argument once, rather than dozens of times against state lawmakers across America who are likely to respond they’re doing the job just fine, thanks.

“Across the country, more than 4,000 dedicated public servants effectively regulate the commercial and tribal casino industry, including sports wagering,” the American Gaming Association wrote in a letter to Schumer this week.

“Replacing an already proven regulatory regime with a non-existent and untested federal oversight apparatus would be out of step with 7 in 10 Americans who think this decision should be left to each state and tribe.”

By: David Purdum of ESPN

Congress is ready to examine whether federal sports betting guidelines are needed as more states begin to open regulated sportsbooks.

On Thursday, a House Judiciary subcommittee scheduled a hearing titled "An Examination of Sports Betting in America" for Sept. 27, in Washington, D.C.

The Subcommittee on Crime, Terrorism, Homeland Security and Investigation will review the current U.S. landscape in the aftermath of a U.S. Supreme Court decision in May that struck down the Professional and Amateur Sports Protection Act of 1992 and opened a path for states to offer legal sports betting. Since the ruling, Delaware, Mississippi, New Jersey and West Virginia have joined Nevada in offering full-scale sports betting, and Pennsylvania and Rhode Island are also gearing up.

"My subcommittee will look at the implications of this SCOTUS ruling and talk about what it means for the integrity of sports as well as what sorts of improper or illicit activities could arise," said subcommittee chairman Rep. Jim Sensenbrenner (R-Wis.). "Ultimately, we want to determine whether or not a basic federal framework is necessary to guide states' new gambling policies."

Next week's hearing was scheduled nearly a month after Senate Minority Leader Chuck Schumer (D-N.Y.) released sports betting guidelines, with the support of some professional sports leagues.

"As legalized sports betting spreads across the states, there is a need for consistent, nationwide integrity standards to safeguard the sports millions of fans love," the NBA, PGA Tour and Major League Baseball said in a joint statement. "We strongly support the legislative framework outlined by Senator Schumer and we encourage Congress to adopt it."

Committee hearings are often postponed. Previously, the same House Judiciary subcommittee scheduled a hearing on sports betting for late June, but it was scrapped abruptly the morning after it was put on the official calendar amid the immigration firestorm over children being separated from their families.

Sen. Orrin Hatch (R-Utah) said in late August that he was planning to introduce sports betting legislation "in weeks," but with Hatch prominently involved in the controversy over Supreme Court nominee Brett Kavanaugh, no new bill has surfaced.

Another federal sports betting bill, titled the GAME Act and authored by New Jersey Rep. Frank Pallone also has been put on hold, as first reported by industry trade publication GamblingCompliance and confirmed by ESPN.

Meanwhile, states are moving quickly to pass legislation and regulations for sports betting. On Tuesday, "The Sports Wagering Lottery Amendment Act of 2018" was introduced in the District of Columbia, aiming to legalize sports betting. More than a dozen additional states have introduced recent sports betting bills.

More than $152 million has been bet on sports at New Jersey sportsbooks since mid-June, when Monmouth Park race track and at the Borgata in Atlantic City began taking wagers.

The American Gaming Association estimates that Americans bet $150 billion on sports annually, the bulk of it in a black market made up of offshore sportsbooks and local bookmakers.

"Legal, regulated sports betting will enable increased transparency and enhance protections for consumers and bet and game integrity," American Gaming Association senior vice president Sara Slane said in a statement Thursday. "We look forward to discussing the U.S. gaming industry's core principles for legalized sports betting with the Judiciary Committee at next week's hearing."

By: Roger Russell of Tax Pro Today

The fallout from Wayfair continues – and the most recent development highlights the potential for the Supreme Court decision to unleash a patchwork of burdensome and confusing state sales tax rules.

The Colorado Department of Revenue announced on Sept. 11 that it will require out-of-state retailers who do business in Colorado to obtain a sales tax license.

The Department said the change is a result of the Supreme Court decision in South Dakota v. Wayfair, which struck down the requirement that a retailer have a physical presence in a state in order to be required to collect and remit sales tax.

“Tax collection at the point of sale eases the process for our residents and creates a level playing field for Colorado businesses, as out-of-state retailers will be required to collect state sales tax, just as in-state retailers do today,” said Colorado Department of Revenue executive director Michael Hartman.

Guidance for out-of-state retailers will be provided by administrative rule and will be consistent with the court’s decision, including prospective application and a small-seller exception for retailers whose in-state sales do not exceed $100,000 or 200 transactions annually.

“The Department will ensure fair, efficient and transparent implementation of this decision,” Hartman said. “We will pave the least burdensome road possible for businesses to comply with these regulations.”

Scott Peterson, vice president of U.S. tax policy and government relations at Avalara, and former executive director of the Streamlined Sales Tax Governing Board, was somewhat taken aback.

“Even though Colorado has been talking about this for years, I was surprised to see the state take this action, given how little has been done to reduce their complicated sales tax,” he said.

“A few years ago, when Congress seemed interested in giving states this kind of authority, the Colorado legislature enacted a law to take advantage of that authority,” he said. “The law was only going to apply to the state sales tax, with the option for local governments if they made the simplification changes then outlined in federal legislation.”

“Since Congress didn’t enact anything, this issue lay dormant until last year, when the state created a sales tax simplification task force. Members of that task force came from the legislature, industry, local government and the accounting industry,” Peterson said. “I presented at one of their meetings last year and thought they were making progress toward addressing the complexity that exists in their sales tax. I was wrong, but I thought the state would wait until more was accomplished.”

Despite the small-seller exception, which matches South Dakota’s exception, Colorado’s sales tax system is anything but simple.

“The problem with Colorado is that they allow their major home rule cities to basically come up with their own sales tax code, which doesn’t have to conform to the state,” said Marvin Kirsner, a shareholder at law firm Greenberg Traurig.

“Many states have passed or adopted similar rules,” he noted. “The $100,000-in-sales threshold for South Dakota may be reasonable because South Dakota has less than a million people, but there are states with far more. A lot of small merchants will be caught. In my own practice, I have seen medium-size business remote sellers, bigger than mom and pops, struggling to get ready in a short amount of time. Most of the state statutes have an effective date of Oct. 1, and some states are looking to enforce retroactivity. They’re counting on people not being able to hire attorneys and go through the state court systems.”

“Colorado’s sales tax system is a mess,” agreed Andrew Moylan, head of the National Taxpayers’ Union’s Interstate Commerce Initiative. “The problem is that they have a very inefficient and outdated system that would be unlikely to survive a legal challenge, even after the Wayfair decision.”

“They have hundreds of taxing jurisdictions. In effect, localities in Colorado are allowed to define and administer a sales tax completely independent from the state,” he explained. “They set their own base, their own rates, and audit separately. Previously it wasn’t an issue because they only imposed it on their own residents. But thousands of retailers across the country have sales there.”

“They cite the $100,000 threshold as if it gives them blanket authority, but the Supreme Court cited other features of South Dakota’s system, one of which is that South Dakota is a member of [Streamlined Sales Tax]. As a result, South Dakota has a system that is relatively easy to implement, and that’s clearly not the case with Colorado. It’s certain to bring litigation.”

Moylan believes a bipartisan bill will go a long way toward clearing up some of the mess in the wake of Wayfair. Rep. Jim Sensenbrenner, R-Wisconsin, joined Rep. Anna Eshoo, D-California, Rep. Zoe Lofgren, D-California, and Rep. Jeff Duncan, R-South Carolina to introduce the Online Sales Simplicity and Small Business Relief Act of 2018. It would ban retroactive taxation, delay implementation of hastily crafted post-Wayfair laws, and establish a small-seller exception of $10 million in sales.

“It can’t pass soon enough,” said Moylan. “Some states, like Florida, have threatened retroactive taxation. Michigan and North Carolina, among others, have plowed ahead with collection rules despite lacking a statutory basis for them. States like Washington and Pennsylvania seek to impose tax obligations on truly tiny businesses, for whom collecting sales taxes nationwide is a daunting and expensive prospect. And states like Colorado and Louisiana have moved ahead with schemes that are obviously unconstitutional in their scope and reach.”

Moylan believes the Sensenbrenner bill has a good chance of passing.

“It’s bipartisan, and it deals with important issues,” he said. “But it won’t be on the president’s desk next week. There are always forces aligned against bills like this.”

As published in Bicycle Retailer

WASHINGTON (BRAIN) — A new bi-partisan bill introduced in the U.S. House would create a federal framework for collecting state sales taxes on online sales, as required by the U.S. Supreme Court's Wayfair decision in June.

Among other things, the bill includes an exemption for businesses that generate less than $10 million in annual U.S. e-commerce sales. It also would prohibit states from trying to collect retroactive sales taxes from sales prior to the June 21 decision.  It also prevents states from imposing sales tax collection duties before Jan. 1, 2019

The legislation is called the Online Sales Simplicity and Small Business Relief Act and was sponsored by Reps. Jim Sensenbrenner (R-Wis.), Anna Eshoo (D-Calif.), Jeff Duncan (R-S.C.) and Zoe Lofgren (D-Calif.).

The $10 million exemption would only apply until the states produce Congressionally-approved laws that would simplify sales tax collection to the point where the exemption would be unnecessary.

"This bipartisan legislation reins in the taxation free-for-all created by the Supreme Court's ruling in Wayfair," Sensenbrenner said in a statement. "Online sellers need clarity and stability in the sales tax arena. Our bill will protect small businesses and internet entrepreneurs from excessive regulatory burdens."

The bill is the third piece of legislation introduced in the House since the Wayfair decision.

By: Zak Stambor of Digital Commerce

A new online sales bill introduced last week would include an exemption for small businesses that generate less than $10 million in annual U.S. e-commerce sales. Based on Internet Retailer research, the bill would require the 1,629 retailers that generated e-commerce sales of at least $10 million last year to collect sales tax on remote sales while allowing smaller merchants to avoid doing so.

Similar to the bill Rep. Bob Gibbs (R-Ohio) introduced earlier this month, this bill—called Online Sales Simplicity and Small Business Relief Act—is a response to the U.S. Supreme Court’s decision in Wayfair v. South Dakota, which allows states to require out-of-state merchants to collect and remit local sales tax on goods sold to their residents.

The new bipartisan bill, sponsored by Reps. Jim Sensenbrenner (R-Wisc.), Anna Eshoo (D-Calif.), Jeff Duncan (R-S.C.) and Zoe Lofgren (D-Calif.), would prohibit states from forcing out-of-state retailers to remit sales taxes from sales prior to June 21, the date of the Wayfair decision. It would prevent states from imposing sales tax collection duties until Jan. 10, 2019 and, most notably, it would carve out a $10 million exemption for small business sellers until the states produce a Congress-approved bill that, according to the bill, would simplify sales tax collection to the point where no small business exemption would be necessary.

“This bipartisan legislation reins in the taxation free-for-all created by the Supreme Court’s ruling in Wayfair,” Sensenbrenner says in a statement. “Online sellers need clarity and stability in the sales tax arena. Our bill will protect small businesses and internet entrepreneurs from excessive regulatory burdens.”

Although, this is the third online sales-tax bill introduced since the Wayfair decision, and few expect Congress to act.

“These issues have been around for some time and Congress has never acted,” says Rachelle Bernstein, vice president and tax counsel at the National Retail Federation. “Do you think they have the time or the inclination to act now? Frankly, I’m skeptical.”

Similarly, Overstock.com Inc. board member Jonathan Johnson III believes that, “Congress will do what it always does, which is nothing,” he says. That being said, he worries that the $10 million exemption doesn’t make sense. “If you’re making $9 million, you can afford to get sales tax software,” he says.

Overstock is No. 32 in the Internet Retailer 2018 Top 1000.

Last-ditch effort

September 17, 2018

By: Bernie Becker of Politico Morning Tax

WELL, WHAT DO WE HAVE HERE? It’s now been almost three months since the Supreme Court blew open the landscape on online sales tax, and now we’ve got a response from Congress.

A bipartisan quartet of House members led by Rep. Jim Sensenbrenner (R-Wis.) rolled out new legislation on Friday, Pro Tax’s Aaron Lorenzo reports — which would, among other things, bar states from doing any collecting from out-of-state online vendors until 2019.

To be clear: In the best of circumstances, it’d be difficult for this kind of legislation to get through Congress, especially with just over three months left until a new crop of lawmakers takes over. For starters, a large group of bipartisan lawmakers supports the Supreme Court’s decision.

And while those supporters originally thought Congress might be needed for cleanup legislation, they no longer believe there’s a need for lawmakers to act. So in the end, where someone stands on how chaotic it’s been in the aftermath of the Supreme Court’s Wayfair decision appears to correlate with their stance on the Sensenbrenner bill.

Opponents of the Wayfair decision believe that the aftermath has been unruly and tumultuous for businesses, leading them to embrace Sensenbrenner’s proposals — including to exempt businesses with under $10 million in sales from having to collect for other states, and to ban states from forcing retroactive collection, something that the Supreme Court endorsed as well. But supporters of the Supreme Court’s ruling argue that states have acted in a very orderly fashion, and are working to make it fairly simple for businesses to comply with the new landscape.

WELCOME BACK to a new week of Morning Tax. Your regular author has become one of those people who goes to the beach in September, and will be taking off the rest of the week. Be sure to send those tips to the rest of the team!

Today also marks 57 years since the opening of the Pittsburgh Civic Arena, the first major sports venue in the world to have a retractable roof and the backdrop for Jean-Claude Van Damme’s 1995 opus Sudden Death. (Tax angle: Built with a combination of public and private money, for around $22 million — well under $200 million in today’s dollars, far less than the current going rate for sports arenas.)

Give us your best stuff.

By: Ryan Prete of Bloomberg BNA

Congress isn’t giving up on trying to regulate online sales tax collections.

Rep. Jim Sensenbrenner (R-Wisc.) introduced the Online Sales Simplicity and Small Business Relief Act of 2018 late Sept. 13. The bill would:

  • ban states from retroactively imposing sales tax collection duties on remote online sellers;
  • require all states to push back economic nexus implementation dates to Jan. 1, 2019; and
  • establish a small seller exemption, meaning a remote seller with gross annual receipts below $10 million in the U.S. isn’t required to collect and remit sales tax.

Of the 25 states that have enacted an economic nexus model, only two—South Dakota and Maine—prohibit the state from applying their laws retroactively. This doesn’t mean all other states are guaranteed to pursue retroactivity; it just means that all other states haven’t legally barred themselves from the activity.

The bill is the latest federal response to the U.S. Supreme Court’s June 21 South Dakota v. Wayfair ruling—which tossed out Quill Corp. v. North Dakota, the Supreme Court’s 1992 physical presence threshold for when states could tax remote sales. The majority in the 5-4 ruling suggested strongly that South Dakota’s law would pass constitutional muster; the law includes economic nexus thresholds of $100,000 or 200 transactions a year.

Since the pivotal court decision, dozens of states are passing versions of South Dakota’s law or enforcing existing nexus laws and rules they already have on the books.

The court didn’t rule on the validity of South Dakota’s law in the absence of Quill, but the state Sept. 12 enacted two bills paving the way for taxation of online sales to begin there. The first bill removed a legislatively enacted injunction barring the state from enforcing its 2016 law. The second bill requires marketplace facilitators like Amazon.com Inc., eBay Inc., and Etsy Inc. to collect and remit taxes on behalf of their third-party sellers.

This isn’t Sensenbrenner’s first foray into remote sales tax. In 2017, he introduced the No Regulation Without Representation Act of 2017 (H.R. 2887) (NRRA), which sought to codify Quill’s physical-presence standard. The bill received a House Judiciary subcommittee hearing in July 2017.

By: Ina Steiner of eCommerce Bytes

Republican and democratic lawmakers in Congress have introduced a bill that would be a huge relief to small businesses worried about online sales tax obligations in the wake of the Supreme Court case overturning Quill.

Among the provisions: a $10 million exemption for small-business sellers until the states simplify collection.

It would also protect sellers from states who might want to collect sales tax retroactively for any sale prior to June 21, 2018. According to BNA, of the 25 states that have enacted an economic nexus model, only two – South Dakota and Maine – prohibit the state from applying their laws retroactively.”

Congressperson Jim Sensenbrenner of Wisconsin introduced the Online Sales Simplicity and Small Business Relief Act.

eBay praised the bill in an announcement on Friday. The company said over one million Americans had signed a petition calling for Congress to pass federal legislation.

But there are critics of the bill, including state legislatures, not surprisingly. One  said the bill should recognize the Streamlined Sales and Use Tax Agreement that has been adopted by more than 20 states, according to The Hill.

You can read the lawmakers’ press release here.

In related news, eBay announced it will begin collecting sales tax on transactions made to buyers located in three states thanks to Marketplace Facilitator laws, as we reported on the EcommerceBytes Blog this morning.

By: Karen Pierog of WHBL

CHICAGO (Reuters) - The ability of states to quickly cash in on a June U.S. Supreme Court ruling that lifted restrictions on their ability to tax all internet sales would be restrained under federal legislation announced on Friday.

U.S. Representative Jim Sensenbrenner, a Wisconsin Republican, said the bill he introduced this week will clarify interstate sales tax collection requirements. The measure would prevent states from imposing sales tax collections on retailers before Jan. 1 and would also bar retroactive taxation.

“This bipartisan legislation reins in the taxation free-for-all created by the Supreme Court’s ruling in Wayfair. Online sellers need clarity and stability in the sales tax arena. Our bill will protect small businesses and Internet entrepreneurs from excessive regulatory burdens," Sensenbrenner said in a statement.

In a ruling in a case brought by Wayfair Inc and other online retailers against South Dakota, the high court overturned a precedent that had barred states from requiring businesses with no physical presence within their borders to collect sales taxes.

For the 45 states that collect sales taxes, the decision opened the door to billions of dollars in additional revenue. Since the June 21 Supreme Court ruling, several states have already expanded taxation, with a few more scheduled to follow starting on Oct. 1, according to the National Conference of State Legislatures (NCSL).

The bipartisan group said on Friday it opposes any effort to delay or limit states' efforts, calling Sensenbrenner's bill "an unwarranted intrusion on state authority which if enacted would continue the competitive advantage online sellers enjoy over Main Street sellers."

"For 26 years states petitioned Congress to address the remote sales tax issue and it did nothing. Now Congressman Sensenbrenner rushes legislation to tie states’ hands in implementing the Wayfair decision," NCSL said in a statement.

The bill, co-sponsored by two Democrats and another Republican, also calls on states to develop an interstate compact that would simplify the tax collection process for remote sellers. NCSL said states and retailers are working on a "fair and simplified collection system." A streamlined sales and use tax agreement has been adopted by 24 states.

Washington, D.C — This week, Congressman Jim Sensenbrenner (WI-05), Congresswoman Anna Eshoo (CA-14), Congressman Jeff Duncan (SC-03), and Congresswoman Zoe Lofgren (CA-19) introduced the Online Sales Simplicity and Small Business Relief Act to clarify interstate sales tax collection requirements in light of the Supreme Court’s decision in South Dakota v. Wayfair.

Rep. Sensenbrenner: “This bipartisan legislation reins in the taxation free-for-all created by the Supreme Court’s ruling in Wayfair. Online sellers need clarity and stability in the sales tax arena. Our bill will protect small businesses and Internet entrepreneurs from excessive regulatory burdens. Throughout the Fifth Congressional District, I continually hear from businesses that they need ‘certainty.’ This bill provides that.”

Background

In June, the Supreme Court handed down a ruling in South Dakota v. Wayfair that overturned decades of precedent regarding online and interstate sales tax collection requirements. In the Wayfair decision, the Court struck down the “physical presence” standard established under National Bellas Hess, Inc. v. Department of Revenue of Ill. and Quill Corp. v. North Dakota. Under that precedent, out of state sellers, also known as remote sellers, were not required to collect sales tax on transactions made in a state in which they did not have a “physical presence,” such as an office, store, or warehouse.

Moving forward, all remote sellers that continue to do out of state business will be required to navigate the more than 10,000 different tax jurisdictions each time they complete a transaction. While some retailers can absorb the costs of the additional regulatory burden, thousands of independent online entrepreneurs will be harmed.

The House Judiciary Committee held a hearing in July titled “Examining the Wayfair decision and its Ramifications for Consumers and Small Businesses.”

How the bill works

The Online Sales Simplicity and Small Business Relief Act bans retroactive taxation, establishes an orderly phase-in of compliance obligations, and creates a small business exemption. Specifically, it bars states from imposing sales tax collection duties on remote sellers for any sale that occurred prior to June 21, 2018—the date of the Wayfair decision. It also prevents states from imposing sales tax collection duties before January 1, 2019. Finally, it provides a $10 million exemption for small business sellers, until the states produce a compact, approved by Congress, to simplify collection to the point where no small business exemption is necessary.

You can view the full the text of the bill here.