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Letter from NCSL officers to all members of the U.S. Senate and House of Representatives asking for no further action on Internet tax issues this session
August 30, 2000 Honorable Trent Lott Dear Senator Lott: As the officers of the National Conference of State Legislatures, we write to respectfully request that, as you return to Washington for the final days of the 106th Congress, you refrain from any action which would extend the current moratorium on Internet access taxes or attempt to address the issue of state and local sales tax collection on electronic commerce transactions. We also ask your diligence to ensure that a moratorium extension is not attached to either a possible "omnibus spending bill" or a "reconciliation bill." As you are aware, the current moratorium does not expire until October 21, 2001. There will be sufficient time in the next Congress to decide if the moratorium should be extended. As we witness the convergence of technologies and the merger of industry giants, what we commonly refer to as "Internet access" may soon cover a number of other technologies and services. By letting the current moratorium run its course, you will have the benefit of seeing just what "Internet access" means in fourteen months. You can determine then, with more information, whether the Internet industry will still be in need of federal protection. You also may be asked to consider legislation that would clarify the role of state and local governments in collecting sales and use taxes on electronic commerce transactions. This could arise as part of an agreement to extend the moratorium on Internet access taxes. We strongly urge you not to consider such legislation in the waning days of the 106th Congress. Instead, we ask you to monitor the on-going efforts of the Streamlined Sales Tax Project. These efforts, which hold great promise for simplifying sales and use tax systems, are at a critical stage and could be permanently harmed by premature congressional action. The National Conference of State Legislatures acknowledges that the present state and local sales and use tax collections systems are burdensome and complex. State legislators have worked with our governors, county executives and mayors, as well as retail merchants across the country to develop the Streamlined Sales and Use Tax Collection System for the 21st Century. This new system will allow states to reduce or eliminate the costs and burdens of sales tax compliance for all sellers. The key features of the proposal are simplification of sales and use tax laws and administration, the use of technology for calculating, collecting, reporting and/or paying the tax through "certified" tax calculation service providers, and the state assumption of the costs of the system. Participation by remote sellers will be voluntary. As of today, 26 states have formally joined the Streamlined Sales Tax Project either through legislation or by executive order of the governor. The participating states are: Arkansas, Florida, Illinois, Iowa, Kansas, Kentucky, Louisiana, Maryland, Michigan, Minnesota, Mississippi, Missouri, Nebraska, New Jersey, North Carolina, North Dakota, Ohio, Oklahoma, Rhode Island, South Carolina, South Dakota, Tennessee, Utah, West Virginia, Wisconsin and Wyoming. Both houses of the California legislature have passed the bill and it will soon be sent to the Governor. This is unprecedented action by the states. The 26 states have acted since January of this year to authorize their participation in the Streamlined Sales Tax Project. The Project now constitutes more than fifty percent of the 45 states that impose a sales and use tax. Officials from these states are engaged in multi-state discussions to develop a more simple, uniform and fair system of state sales and use taxation. We expect to receive recommendations for sales and use tax simplification from the Project as early as next month. We intend to take these recommendations to our colleagues for action by their respective legislative bodies beginning in January of 2001. Elected state officials have recognized the problem and are working together to develop the solution. States should have the opportunity to simplify their sales and use tax systems without federal interference or congressional mandates specifying state sales tax rules and regulations. In summary, we believe that action during the remaining days of the 106th Congress on any aspect of the Internet taxation issue is unnecessary and premature. We urge you in the strongest possible terms to defer any decisions on this critical and fundamental issue until next year. Sincerely,
Senator Jim Costa Senator Stephen Saland Senator Angela Monson Representative Paul Mannweiler
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