House Resolution Requests Sales Tax from Online Retailers

Feb 7, 2013

A resolution to try to get online retailers to collect sales tax from Utah buyers - passed unanimously out of committee today.  House Joint Resolution 4 asks the U.S. Congress to require sellers like Amazon.com or Ebay to collect and turn over applicable sales tax on items sold to Utah purchasers.


Republican Representative Steve Eliason argued on behalf of the resolution before the House revenue and taxation committee on Wednesday. He said that currently it is up to Utah residents to voluntarily pay the taxes they owe on online purchases.


“Knowing that approximately 1% of the state pays use tax and theoretically about 50% of the state shops online, we have a huge compliance issue – approximately 50% are not correctly remitting their sales tax. I don’t blame them. It’s extremely complex.”


Eliason's bill asks the U.S. Congress to authorize individual state's to require online sellers to collect these taxes. The problem is that the Supreme Court weighed in on the issue in a 1992 remote-sales case. That case, Quill v. North Dakota, held that the commerce clause in the US Constitution means that retailers who don't have a physical presence in a state can't be required to collect and turn in sales taxes to that state (despite the fact that the purchaser is still required to remit this tax to the state in which they live). The court also said at that time that Congress has the power to resolve the question.


Democratic Representative Brian King of Salt Lake City thinks its time for Congress to level the playing field for local businesses.


“We need to get behind our local businesses. We need to do what we can in terms of keeping Utah first and keeping our commerce in Utah as vibrant as it can be and as strong and healthy as it can be – to make sure that online sellers don’t have a competitive advantage over our folks."


Dave Davis - President of the Utah Retail Merchants Association and Utah Food Industry Association testified before the committee saying that the issue is first and foremost about fairness for Utah retailers.


“From our perspective we’re less concerned about the revenue piece of it as we are about the fairness piece of it. We really feel that from a brick and mortar perspective that we’re asked to run a 100 meter dash and the online retailers are asked to run a 75 yard dash."


As a resolution, the bill does not in itself force online retailers to collect this tax and turn it over to the state of Utah. Instead it is intended to send a message to Washington that Utah agrees with the majority of other states and that its time for this tax to be collected.