The American Institute of CPAs is opposing a model statute proposed by the Multistate Tax Commission that would require out-of-state retailers to supply residents’ purchase information to states in an effort to increase use tax compliance, according to an article in the Journal of Accountancy. You can read the AICPA’s letter to the MTC detailing its objections to the statute here.
We too oppose the proposed model statute. We have long been concerned about the invasion of consumer privacy inherent in reporting consumers’ purchases to the state, and in fact a federal judge has placed an injunction on a Colorado law instituting similar reporting requirements.
The right way to ensure use tax compliance is not to report consumers’ purchases to the state, but instead to shift the remittance of sales and use tax from the consumer to the retailer. Multistate retailers, like local retailers, should be the ones to collect and remit sales tax, not the consumer.
The Streamlined Sales Tax initiative has worked hard to make it easy for multistate retailers to collect and remit sales tax. It was nice to see the AICPA acknowledge that in their letter, and as they point out, the proposed model statute would ignore all that work. Instead of trying to reinvent the wheel, let’s build on the good work already accomplished by Streamlined and focus on making it possible for states that have adopted Streamlined’s guidelines, and therefore have made it easy for multistate retailers to collect sales tax, to require those retailers to collect sales tax.