After six years of tries, an internet sales tax bill finally has passed the Legislature and been signed into law by Gov. Butch Otter; Otter signed the bill, HB 578 from Rep. Lance Clow, R-Twin Falls, on Wednesday.
Idaho retailers have long supported some move on internet sales taxes, saying out-of-state retailers are undercutting them by selling to Idahoans without charging the same 6 percent sales tax that they must collect and remit on every sale. But the state had no mechanism to accomplish it. The tax still was due, but Idahoans have been expected to self-report their remote purchases and pay the 6 percent tax in the form of use taxes on their annual state income tax returns; many don’t.
Last year, internet retailing Amazon signed a voluntary agreement to begin collecting and remitting Idaho sales taxes. Clow’s bill would require the same of other retailers who have affiliate sellers in Idaho who do more than $10,000 a year in business. It wouldn’t cover all remote sellers, but Clow said he estimates the move could bring in $22 million to $37 million a year in currently uncollected sales taxes.
The bill passed the House on Feb. 23 on a 46-21 vote, and the Senate 30-4 on March 13. Clow’s bill is co-sponsored by House Majority Leader Mike Moyle, R-Star, who also long opposed past internet sales tax bills.
During the Senate committee hearing on the measure, Clow told senators, “I just think this is long overdue. Sales tax is due based upon where the buyer was, not where the seller was, so we know the taxes are due. This is just the timely way to deal with this, and I think it’s a proper role to address the change in the economy and the internet market.”
Members of the Senate panel, including some who long had been resistant to the idea, embraced Clow’s proposal, saying it’s simple and timely. Sen. Jeff Siddoway, R-Terreton, said, “I always thought this was a fairness deal.”
Otter signed the bill without comment. It takes effect July 1.