
Chairman
The Honorable James S. Gilmore,
III Governor Commonwealth of Virginia
Members
Mr. Dean F. Andal Chairman California Board of
Equalization
Mr. C. Michael Armstrong Chairman and
CEO, AT&T
Mr. Joseph H. Guttentag Senior Advisor to the Assistant
Secretary for Tax Policy U.S. Department of the
Treasury
The Honorable Paul C. Harris Sr. Delegate Virginia House
of Delegates
The Honorable Delna Jones Commissioner Washington
County, Oregon
The Honorable Ron Kirk Mayor City of Dallas
The Honorable Michael O. Leavitt Governor State of
Utah
Mr. Gene N. Lebrun President (1997-1999) National
Conference of Commissioners on Uniform State Laws
The Honorable Gary Locke Governor State of
Washington
Mr. Grover Norquist President Americans for Tax
Reform
Mr. Robert Novick General Counsel U.S. Trade
Representative
Mr. Richard Parsons President Time Warner, Inc.
Mr. Andrew Pincus General Counsel U.S. Department of
Commerce
Mr. Robert Pittman President & Chief Operating
Officer America Online
Mr. David Pottruck President & co-Chief Executive
Officer Charles Schwab and Company
Mr. John W. Sidgmore Vice Chairman MCI WorldCom and
Chairman UUNET
Mr. Stanley Sokul Independent Consultant Association
for Interactive Media
Mr. Theodore Waitt Chairman Gateway,
Inc. |
|
|
For Immediate
Release April 17, 2000 |
Press
Contacts: Debbie Neville O'Keeffe &
Company, Inc. (703) 883-9000, ext.
104 dneville@okeeffeco.com |
Heather
Rosenker Executive Director Advisory Commission on
Electronic Commerce (703)
993-8049 rosenker@gmu.edu |
Mark Miner Press
Secretary Office of the Governor of Virginia (804)
692-3110 mminer@gov.state.va.us |
E-Commerce Commission Report
Calls for Nexus Clarification
Arlington, VA - April 17, 2000 - The Advisory Commission on
Electronic Commerce's Report to Congress has stimulated the
introduction of bi-partisan legislation that would prevent
states from forcing out-of-state businesses to collect sales
tax on their behalf. Introduced to Congress last week, the
"New Economy Tax Simplification Act" is sponsored by Senators
Judd Gregg (R-NH) and Herb Kohl (D-WI), and already has been
referred to the Senate Finance Committee.
"Our bill goes directly to the heart of the Internet tax
debate," stated Senator Gregg. "It provides clear rules of the
road for all parties involved. It sets up clear nexus
standards for the 21st century."
The Commission's Report, that includes both recommendations
which received two-thirds of the Commissioners' support as
well as majority vote policy proposals, was submitted to
Congress April 12. The Report emphasizes the need for
clarification of nexus standards in a cyber economy that is
driving new business models and blurring old tax rules. Nexus
standards refer to the activities a business undertakes within
a state that would obligate a business to collect and remit
that state's sales taxes.
"As the physical and cyber worlds converge, the lack of any
clear nexus standards has created a great deal of uncertainty
for both business and tax administrators, which will likely
lead to future disputes and costly litigation," said
Commissioner Ted Waitt, chairman of the board, Gateway, Inc.,
in his letter included in the Commission's Report.
"Under the guise of 'protecting Main Street retailers,'
state and local governments are urging Congress to force
Internet sellers to collect sales taxes wherever their
customers are located," said Dean Andal, Chairman of the
California State Board of Equalization and the Advisory
Commission member who proposed clarifying nexus standards
during Commission proceedings. "Congress is being asked to
pass the equivalent of a $4.5 billion tax increase on
consumers when 72 percent of Americans polled this month
oppose such taxes. It would also force Internet sellers to
keep track of taxes in over 30,000 local tax jurisdictions,
and file tax returns and be audited by states and localities
they have never visited."
The Commission's Report notes the lack of clarity and
uniformity in current tax rules and questions the current ad
hoc system that determines each business' nexus. To address
these concerns, the Commission spelled out a set of "bright
line" factors that would not constitute nexus for either a
small business or a large retailer's "dot-com" subsidiary,
such as maintaining a Web site on equipment in a state or
having customers in a state.
"In order to be fair to small businesses reaching out for
the first time into a global marketplace, entrepreneurial
startups, and even larger retailers with 'dot-com'
subsidiaries - the Report calls for clear and uniform tax
rules to facilitate growth of electronic commerce," Commission
Chairman and Virginia Governor Jim Gilmore said. "We should do
everything we can to encourage small businesses to get on the
Internet, not throw burdensome tax and regulatory obstacles in
their way. The growth of this industry means greater
productivity for businesses and more jobs for people."
Responding to the charge that state and local governments
will suffer if they cannot tax all Internet purchases, Andal
said, "There is no evidence that e-commerce threatens adequate
revenues for government services. Nor does the rise of
e-commerce threaten small businesses. The Internet is the one
place where small entrepreneurs can compete on equal footing
with major corporations." Mr. Andal stated that California,
with the most e-commerce friendly tax laws in the nation, had
sales tax revenue growth of one third in less than five years.
According to Andal, this extraordinary increase in sales tax
revenue came from traditional retailers of goods, despite
Californians' huge appetite for Internet purchasing.
For more information about the Commission, its meetings, or
to view its Congressional report, the public may visit the
Commission's Web site at http://www.ecommercecommission.org/.
About the Advisory Commission on Electronic
Commerce
Appointed by Congress in October 1998 as part of the
Internet Tax Freedom Act, the 19-member Commission has been
tasked with studying the impact of federal, state, local, and
international taxation and tariffs on transactions using the
Internet and Internet Access. The Commission's recommendations
are due to Congress no later than April 21, 2000.
###
www.ecommercecommission.org 3401 North Fairfax
Drive Telephone: (703) 993-8049 · Facsimile: (703)
993-8250 |