Arkansas leaders sorting out steps to tax online sales

Posted: June 22, 2018 at 4:30 a.m.

Arkansas officials reacted cautiously to the U.S. Supreme Court's ruling Thursday that cleared the way for states to require out-of-state online retailers to collect and remit sales taxes.

In a 5-4 ruling, the nation's high court overturned a 1992 court precedent that barred states from requiring businesses that have no physical presence in those states to collect sales taxes. Thursday's ruling upheld a South Dakota law requiring certain out-of-state retailers, including those that operate remotely online, to collect its sales taxes.

U.S. Rep. Steve Womack, who has repeatedly sponsored or co-sponsored legislation to address this issue, said he wasn't surprised by the court ruling.

"Now, it's every state on their own," the Republican from Rogers said in an interview.

Womack said he hopes Congress will finally pass legislation addressing the issue.

"None of this money goes to the federal government. All of this money is due and payable to our states, our counties and our cities. For the federal government, for the Congress of the United States, to be standing in the way of them being able to collect what is rightfully theirs, I think is an abdication of our duty," he said.

"I have been preaching as loud as I can to our leadership, under [former House Speaker John] Boehner, under [House Speaker Paul] Ryan and others, that Congress has the unique opportunity to fix a problem before it becomes really chaotic."

Arkansas Gov. Asa Hutchinson said, "The Supreme Court decision recognizes both the constitutional role of the states and the changing nature of the world economy.

"The decision is based upon fairness in the marketplace and is good news for the homegrown businesses in Arkansas that have to compete with the online businesses that operate globally and sell locally," the Republican governor said in a written statement.

"I expect states to move quickly in light of the Court's decision and I will be consulting with the Department of Finance and Administration and members of the General Assembly to determine what, if any, action needs to be taken in Arkansas," Hutchinson said.

The finance department's attorneys are working to determine if, prior to implementing this tax, legislation is needed, said finance department spokesman Scott Hardin.

"While today's Supreme Court case allows states to require remote sellers to collect sales taxes, [the finance department] is reviewing the Supreme Court ruling to determine appropriate action," he said in a written statement.

During the 2017 regular session, a bill patterned after South Dakota's law cleared the Arkansas Senate but failed to pass the Arkansas House of Representatives.

After the bill cleared the Arkansas Senate, Seattle-based Amazon announced that it would begin collecting sales taxes on its sales to Arkansans, starting March 1, 2017, and remitting the taxes to Arkansas.

State Rep. Dan Douglas, R-Bentonville, who was the House sponsor of the bill sponsored by Sen. Jake Files, R-Fort Smith, said the U.S. Supreme Court ruling will make it "a little easier" for similar legislation to pass the Arkansas Legislature because some lawmakers "had some heartburn" in 2017 over the fact the South Dakota law hadn't been found to be constitutional yet.

The Department of Finance and Administration doesn't have any figures for potential revenue from online sales taxes, Hardin said.

Arkansas House Revenue and Taxation Committee Chairman Joe Jett, R-Success, said he's heard revenue estimates from $10 million to $150 million more.

"My gut feeling is my best guess is probably someplace in between, " he said.

Jett said he thinks that most of his fellow lawmakers "probably would take a wait-and-see approach on the state level for the simple fact that we would probably like the federal government to get involved" because he worries about "a hodgepodge" of state tax codes across the nation.

"It would be a whole lot easier right now if Congressman [Rick] Crawford and Congressman [Steve] Womack and those guys would engage this thing and clean this up as opposed letting all 50 states just pass their own version and all of a sudden you go in and clean it up later," Jett said.

Information for this article was contributed by Frank E. Lockwood of the Arkansas Democrat-Gazette.

State Rep. Dan Douglas, R-Bentonville, is shown in this file photo.

Arkansas House Revenue and Taxation Committee Chairman Joe Jett, R-Success, is shown in this photo.

U.S. Congressman Steve Womack is shown in this file photo.

A Section on 06/22/2018