This letter to the editor in the MetroWest Daily News (MA) brings up an important point about states’ actions toward online sales tax.
While the writer acknowledges that the newspaper had “hit a homerun” in their article on online sales tax by explaining that “the tax advantage on-line retailers get is unfair and a serious problem,” he goes on to criticize the paper for “passing the issue off to the federal government.” He says:
Yes, a federal solution is needed and is warranted. But states shouldn’t be expected to do nothing and just sit around and wait for a federal solution; rather they need to do everything they can to raise the profile of this issue so the feds finally do stand up and act.
He’s absolutely right, states need to send Congress the message that they should create a federal solution. But what he doesn’t mention is that the best way for states to do this is to join the Streamlined Sales and Use Tax Agreement.
Becoming a member of Streamlined has two advantages for states: First, 24 states are currently members, and as that number rises, it will become clear to Congress that states need a federal law allowing them to require online retailers to collect sales tax—since the entire reason states join Streamlined is to make the online collection of sales tax easier for both states and retailers.
Which leads to the second advantage: By becoming a member of Streamlined and adopting its guidelines, which simplify and standardize sales tax categories and definitions to make collecting sales tax online easier, states prepare themselves for the moment when legislation does pass. As soon as the bill becomes law, a Streamlined state will be ready to hit the ground running and enable online retailers to easily collect sales tax for that state.
The writer of the letter to editor makes a good point:
If [Massachusetts] were able to collect the online sales tax it may have not been necessary to raise the tax from 5 percent to 6.25 percent. The state lost a lot of revenue, especially around the holidays. With the increase of online sales, this problem is only going to get worse, not better, and the residents of Massachusetts will suffer in the long run.
Congress needs to pass a law allowing states to require online retailers to collect sales tax—a law like the Main Street Fairness Act, which will soon be introduced in Congress. The best way for states to let Congress know that they need that legislation is to join the Streamlined Sales and Use Tax Agreement.