DALLAS – A new online sales tax bill introduced today by Congressman Jason Chaffetz (R-Utah) is not only even more harmful than the Marketplace Fairness Act toward small businesses and interstate commerce, but also opens the gates to an unprecedented expansion of taxation and taxpayer harassment by out-of-state tax collectors.
“I’m sorry to say that the Chaffetz bill is a disaster and must be opposed,” said IPI President Tom Giovanetti. “The Remote Transactions Parity Act is a solution that is far worse than the problem. In fact, the Chaffetz bill doesn’t even solve the core issue of nexus, or where precisely an electronic transaction takes place.”
“It opens the door to a grotesque expansion of state tax collection authority that is almost certainly unconstitutional, and places mandates upon the states that are probably unconstitutional as well,” said Giovanetti. “If you like having to comply with multiple audits by multiple states year after year after year, you’ll love the Chaffetz bill.”
“The Chaffetz bill empowers government tax auditors to reach as far as the Internet sprawls, eliminating any requirement that businesses have a physical connection to a taxing jurisdiction before it can be forced to levy taxes on its sales,” said IPI Resident Scholar of Tax and Innovation Policy Bartlett D. Cleland.
“If this law were to pass, a person merely calling up a business’s website would be enough to require that business, and hence consumers, pay taxes in the state where the customer resides,” said Cleland. “Out-of-state tax authorities could audit businesses in any state—regulation without representation or reprieve. A discriminatory Internet tax would look promising by comparison.”