Idahoans could see Web tax

State lawmakers took a step Monday toward taxing Internet and catalog sales to Idahoans, deciding to consider entering a multi-state agreement to simplify and align tax codes to help businesses collect tax dollars and ship them back.

But Idaho’s tax laws won’t change right away. The bill that the House Revenue and Taxation Committee voted to introduce would give the state’s tax officials a year to propose the changes needed to streamline the tax code with those of other states.

“We’ve had a bumpy road with this legislation in the past, and we didn’t want to try to do it all at once,” said Dan John, tax policy manager for the Idaho Tax Commission.

Eventual tax code changes would allow retailers to voluntarily tap into an electronic database to simplify collecting and paying taxes to various states, potentially generating millions of dollars for Idaho, John said.

While all Idahoans are required by law to report and pay sales taxes on goods they purchase online and through catalog, few do.

Gov. Dirk Kempthorne issued an executive order in July 2005 authorizing Idaho to participate in the Streamlined Sales Tax Project, but past efforts to bring Idaho tax law in line with the project have stalled.

Currently, 18 of the 45 states that have a sales tax are full members of the multi-state agreement, John said.

Washington’s legislators are considering similar legislation this year.

Several legislators said they favor learning more about streamlining, but others, such as Rep. Jim Clark, R-Hayden Lake, suggested the state is moving too quickly.

Clark, one of two members of the 18-person committee who voted against introducing the bill, said lawmakers hadn’t discussed the idea since Kempthorne’s order.

“I don’t want to be the skunk in the garden, but this is a huge issue,” he said.

“I’m not sure if this is a good one to start off with” so early in the day.

Rep. George Sayler, D-Coeur d’Alene, said it’s necessary to at least initiate the process of streamlining the code to give the state a chance to join.

“I think the time for the dialogue is here,” he said.

States must rely on voluntary corporate cooperation because the U.S. Supreme Court has ruled that state tax laws are too complex to allow individual states to enforce their laws on out-of-state entities.

There is a “comfort to the retailers” to know they are paying taxes correctly so they don’t have to pay back taxes later, John said.

John said the legislation needed to change the code will be “fairly large,” even though “compared to other states, our sales tax is relatively simple.”

The bill includes an emergency clause, meaning the legislation would take effect immediately upon its approval.

“This just really sets the ball rolling,” John said.