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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.)

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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.

By: Naomi Jagoda of The Hill

A bipartisan group of lawmakers rolled out legislation on Friday that's designed to provide certainty to businesses following the Supreme Court's online sales tax ruling in June.

The bill would provide a framework for when states can require out-of-state online retailers to collect their sales taxes.

"Online sellers need clarity and stability in the sales tax arena," said Rep. Jim Sensenbrenner (R-Wis.), one of the bill's authors. "Our bill will protect small businesses and internet entrepreneurs from excessive regulatory burdens."

In its June opinion in South Dakota v. Wayfair, the Supreme Court overturned a 1992 ruling that restricted states' ability to compel out-of-state internet business to collect their sales taxes.

The court praised features of South Dakota's law requiring certain online retailers to collect its sales taxes, but the court didn't provide specific criteria for what would make a state's online sales tax law constitutional.

Critics of the Supreme Court's ruling are concerned that it will be burdensome for small online retailers, since there are thousands of state and local tax jurisdictions across the country.

Sensenbrenner's bill is aimed at addressing those concerns. It would prevent states from requiring remote sellers to collect sales taxes on purchases made before the Supreme Court's ruling was issued. It also would only allow states to impose sales tax collection duties on remote sellers for purchases made after Jan. 1, 2019.

Additionally, the legislation would prevent states from requiring online retailers with less than $10 million in sales to collect their sales taxes until the states come up with a compact simplifying their sales-tax collection that's approved by Congress.

Sensenbrenner's bill is co-sponsored by Reps. Anna Eshoo (D-Calif.), Jeff Duncan (R-S.C.) and Zoe Lofgren (D-Calif.).

Sensenbrenner, Eshoo and Lofgren had participated in a friend-of-the-court brief that argued that Congress was better suited to address the online sales tax issue than the Supreme Court.

The bill was praised by the National Taxpayers Union, which has been a critic of the Wayfair ruling.

“Chaos is brewing across the country as states have scrambled to seize new tax power for themselves after the Court’s ruling in Wayfair," said Andrew Moylan, head of the group's interstate commerce initiative. "By solving some of the most vexing questions, like retroactivity, state implementation dates, and obligations for small sellers, Congressman Sensenbrenner’s bill is a great start down the long path of crafting a remote sales tax system that underscores, rather than undermines, important principles of free markets, limited government, and simplicity.”

But the National Conference of State Legislatures, which cheered the June Supreme Court decision, has blasted Sensenbrenner's proposal.

"The Sensenbrenner legislation is an unwarranted intrusion on state authority which if enacted would continue the competitive advantage online sellers enjoy over Main Street sellers," the group said.

Joseph Bishop-Henchman — executive vice president of the Tax Foundation, which was favorable about the Supreme Court ruling — said he thinks the bill is "a good basis for further discussion.” But he said that states don't have a lot of confidence that Congress has the ability to pass compacts like those envisioned in the legislation, and he said that the bill should recognize the Streamlined Sales and Use Tax Agreement that has been adopted by more than 20 states.

By: Todd Ruger of Roll Call

The U.S. Commission on Civil Rights urged Congress on Wednesday to update the landmark law that protects voter rights, finding in a new report that a 2013 Supreme Court decision helped lead to elections with voting measures in place that discriminate against minorities.

But opposition from Republican lawmakers has stalled legislation to change the Voting Rights Act of 1965 since the 5-4 decision in Shelby County v. Holder that struck down a key enforcement mechanism in the law. Current efforts appear stuck for the same reason.

“Today’s report reflects the reality that citizens in the United States, across many states, not limited only to some parts of the country, continue to suffer significant, and profoundly unequal, limitations on their ability to vote,” commission Chair Catherine Lhamon said in a news release. “That stark reality denigrates our democracy and diminishes our ideals.”

The Shelby County decision struck down Section 4 of the law, which required some states with a history of discriminatory voter laws to get pre-clearance from the Justice Department before implementing voting laws. That section created a formula for how states and jurisdictions should comply with the pre-clearance standard, which the conservative justices who formed the majority called outdated and said Congress “may draft another formula based on current conditions.”

The commission’s 402-page report found that states previously covered under the pre-clearance requirements passed new laws and voting procedures — strict voter identification laws, closing polling places, cutting early voting and removing names from voter registration rolls — that are hurting minority voting rights.

And it found the Justice Department can still enforce the Voting Rights Act through Section 2, but that is an “inadequate, costly, and often slow method” that allows elections to take place under laws later found to be discriminatory. It also limits the DOJ’s ability to supervise elections.

“This report puts a federal imprimatur on what we have been saying: the right to vote is under attack, and that diminishes our democracy,” said Vanita Gupta, president of The Leadership Conference on Civil and Human Rights.

The Voting Rights Act was reauthorized in 2006 unanimously in the Senate and with an vast majority in the House, and signed into law by Republican President George W. Bush.

Vermont Democratic Sen. Patrick J. Leahy introduced the Senate version of the bill, which has 49 co-sponsors, with Alaska Sen. Lisa Murkowski as the only Republican. In the House, Wisconsin GOP Rep. Jim Sensenbrenner has been pressing for his version of the bill and has 88 co-sponsors, but only nine of them are Republicans.

What a great time of year in Wisconsin! Summer is moving on and all that comes with fall is settling in: cooler air, Packers, Badgers, crunch time for Brewers, and back-to-school. Reality is hitting families all over our state as most students return to the classroom and begin preparation for their future. As important decisions are being made about next-steps, I hope public service, and specifically, service in our United States military, will be under serious consideration. 

I am proud that each year I have had the privilege of nominating some of the finest young men and women of the 5th Congressional District to attend our nation’s military academies. This is one of the most satisfying aspects of my job as your Congressman; and I have been humbled by the hard work and dedication these students have demonstrated from the time they contact my office when they are in high school until the time they serve as leaders in our military. In 2017, at the recommendation of my Academy Selection Committee, I had the honor of nominating 34 exceptional young men and women. 

The U.S. Military Academy, U.S. Naval Academy, U.S. Air Force Academy, and Merchant Marine Academy accept qualified candidates who have been nominated by their Member of Congress. The academies consider evidence of character, scholarship, leadership, physical aptitude, medical fitness, goals and motivation in evaluating nominees. Upon graduation, students are commissioned as officers in their respective military branch.

Now is a good time to remind those interested in pursuing a nomination that the applications are currently being accepted. Interested students who reside in Wisconsin’s Fifth Congressional District seeking to enter a service academy in the summer of 2019 (class of 2023) must submit an application to my Brookfield office no later than Friday, October 12, 2018. Information about the process can be found on my website (https://sensenbrenner.house.gov/academy-nominations), or by contacting my Brookfield Office at 262-784-1111.

Washington, D.C.—The National Taxpayers Union (NTU) today announced Congressman Jim Sensenbrenner (WI-05) ranks first on the list of House members for having the best voting record on lowering taxes and limiting government. Notably, Sensenbrenner has received this “Taxpayers’ Friend Award” every year he has been in Congress, and has ranked first on this list four times since NTU began its rankings in 1992. Each year, NTU examines every roll call vote taken in the House and Senate, then weighs them based on fiscal or regulatory impact to taxpayers.

“My record reflects I have been unwavering in my efforts to stand up for taxpayers – fighting to ensure that taxpayer dollars are spent responsibly and effectively. I am proud of the recognition I have received from the National Taxpayers Union, and I thank NTU for all the work they do in bringing attention to these crucial issues,“ said Congressman Sensenbrenner“I will always keep taxpayers as my top priority and will continue to be their voice in Congress.”

“Only lawmakers with a voting record that is the best-of-the-best will earn NTU’s Taxpayers’ Friend Award,” said Pete Sepp, president of NTU. “Congressman Sensenbrenner has demonstrated a tireless commitment to supporting taxpayers’ interests in Washington, and a dedication to solving the government’s tax-and-spend problems with action rather than just words. Fixing America’s budget problems takes hard work, and Congressman Sensenbrenner has been doing that work every single day.”

You can view NTU’s full 2017 congressional scorecard here.
You can view the NTU Taxpayers’ Friend List here.
You can view NTU’s methodology here. 

Brookfield, WI—The National Narcotic Officers’ Associations’ Coalition (NNOAC), which represents 40 state narcotic officer associations and more than 60,000 law enforcement officers, announced its support of the Stopping Overdoses of Fentanyl Analogues (SOFA) Act. Congressman Jim Sensenbrenner (R-WI-05) and Senator Ron Johnson (R-WI) have introduced companion versions of the SOFA Act in the House and Senate, respectively.

Congressman Sensenbrenner: “The SOFA Act will help empower law enforcement officers to combat the growing spread of deadly fentanyl analogues. As criminals look for new ways to circumvent our laws, we must adapt to the evolving threats in the opioid epidemic. I thank the NNOAC for their service keeping our communities safe and for their support of this important legislation.”

NNOAC President Bob Bushman: “We appreciate the leadership from Chairman Sensenbrenner and Senator Johnson on this important issue. With more than 72,000 drug poisoning deaths in 2017 alone, many of them related to the ever increasing use of fentanyl-laced heroin, this tragic epidemic will only get worse unless we put forward every tool possible to tackle it. We urge swift consideration and passage of the SOFA Act.”

Senator Ron Johnson: “The SOFA Act will give law enforcement important new tools to curb the supply of illicit fentanyl and close legal loopholes that have allowed criminal drug manufacturers and traffickers to stay one step ahead of the law. I appreciate the support of the National Narcotic Officers’ Associations’ Coalition for this important bill. I join them in urging Congressional leadership to pass the SOFA Act as soon as possible.”

You can read more about the SOFA Act here.

You can read the bill text here.

You can view the full text of the NNOAC letter below:

 

Dear Congressman Sensenbrenner,

I am writing on behalf of the National Narcotic Officers’ Associations’ Coalition (NNOAC), which represents 40 state narcotic officer associations and over 60,000 law enforcement officers, in support of your legislation, H.R. 4922, the Stopping Overdoses of Fentanyl Analogues (SOFA) Act.

As you know, cases involving fentanyl have exploded, and we are seeing drug overdose deaths surge because of it. Confiscations or seizures of fentanyl have risen by nearly seven-times from 2012 to 2014, with 4,585 fentanyl confiscations in 2014. Disconcerting, because of the potency of fentanyl, fentanyl related deaths have more than doubled from 2013 to 2014. Fentanyl is now the fifth most commonly found drug in an overdose death. It is tragic to witness the devastating effect that the opioid and heroin epidemic is having on our communities. Many of us have family members or friends who have been afflicted with addiction, or sadly have overdosed.

To tackle this growing problem, we believe SOFA provides significant steps to combat and deter the fentanyl trade. By immediately rescheduling nineteen fentanyl analogues to Schedule I and making it easier for DEA to reschedule other fentanyl analogues, it will enable law enforcement to be more pro-active in responding to the opioid crisis. NNOAC appreciates that you sought to address the whack-a-mole challenge of targeting the quickly altered chemical makeup of dangerous narcotics to avoid prosecution. By empowering DEA to respond sooner with drug scheduling authority, it will make it easier to keep up with the new compounds.

The ever-changing nature of synthetic opioids have made our ability to go after those who produce, traffic, and distribute the poison that is flooding our streets ever more difficult. Tragically, every day that we continue to debate how to tackle the opioid problem, 91 more Americans have lost their lives from an overdose. With fentanyl being added to the mix, it has only exacerbated the carnage.

We appreciate the hard work that you have put in to this legislation and believe that SOFA will provide an additional valuable tool to help get this epidemic under control. Please consider us as a resource at your disposal as you move forward with this legislation and other policy initiatives.

Sincerely,
Bob Bushman
President
National Narcotic Officers’ Associations’ Coalition