State joins uniform tax program
BOISE – Gov. Dirk Kempthorne has issued an executive order to have Idaho join 43 other states and the District of Columbia in participating in the Streamlined Sales Tax Project, a multi-state effort to make sales tax definitions and procedures more uniform among states and localities.
Eventually, the project could make it easier for Congress to permit states to tax Internet sales, but in the nearer term, it’s aimed at making tax systems simpler and more consistent.
“It helps the businesses that have to comply with all these different laws, and the simplification itself enhances compliance,” said Ted Spangler, deputy attorney general for the Idaho Tax Commission. “There are fewer mistakes, there’s more willingness to comply, and there’s more consciousness of what the rules are, because they are much more alike from state to state and from locality to locality.”
Idaho’s tax system is relatively simple and won’t take much changing, as the state taxes all food items and has few local-option taxes. Jim Husted, a state tax policy specialist, said some administrative changes regarding state tax collection procedures likely would be needed; state lawmakers would need to approve any such changes.
Idaho already requires sales taxes to be paid on purchases from remote sellers, whether they’re from mail-order catalogs, TV shopping networks or the Internet, but the U.S. Supreme Court has barred states from requiring out-of-state retailers with no physical presence in the state to collect and remit the tax. Technically, people are supposed to report the sales themselves and pay the tax on their state income tax returns, but a national study by the University of Tennessee suggested Idaho could be losing as much as $44 million a year in taxes on such sales, and, nationwide, states are missing out on billions.
Kempthorne spokesman Mike Journee said streamlining state sales tax codes is “a noble idea, and that’s the reason why we have been taking part in it, so we can help shape the debate.”
The governor’s executive order moves Idaho from an “observing” state in the process to a “participating” state, so Idaho has a vote in how the project is developed, but it would take legislative action to actually change Idaho tax laws.