LITTLE ROCK, Ark. (AP) - The Arkansas Senate approved a measure Monday aimed at forcing Amazon to begin collecting state sales taxes, a plan that’s pitting Wal-Mart and lawmakers eyeing additional revenue from the e-commerce giant against conservative activists.
The bill approved by a 23-9 vote would require out-of-state companies with no physical presence in the state to collect the tax if they sell more than $100,000 worth of products or make at least 200 transactions. Arkansas is one of a handful of states where Amazon doesn’t have a distribution center or office and doesn’t collect sales taxes.
The measure is one of two efforts aimed at recovering as much as $100 million in annual tax revenue lawmakers say the state is missing out on from Amazon. Another bill pending before the House would require Amazon and similar out-of-state companies to inform Arkansas customers that they owe the tax and to provide a list to finance officials about purchases made within the state.
“There is a tax (already) on the books,” said Republican Sen. Jake Files, who sponsored the measure approved Monday. “The fact that someone is not remitting the tax doesn’t mean it’s not there.”
Files’ proposal now heads to the House. Amazon declined to comment on the proposals, which have the backing of Bentonville-based Wal-Mart. The Senate measure is modeled after a 2016 law in South Dakota, where officials last month said Amazon had agreed to begin collecting state and local sales taxes on purchases. The House bill is modeled after a Colorado law that the U.S. Supreme Court let stand last year.
The efforts face opposition from conservative groups who question the constitutionality of the Arkansas proposals. Grover Norquist, the head of Americans for Tax Reform, sent lawmakers a letter last month opposing Files’ measure and he said Monday the group is sending another letter opposing the House bill.
“Requiring businesses to remit taxes to a state where they have no physical presence is simply unfair, as out-of-state employers and their employees will not use or benefit from any public service, program, or project funded by Arkansas’s sales tax,” Norquist wrote.
To avoid collecting taxes, Amazon has historically relied on another high court ruling that predates the era of online shopping. That 1992 decision bans states from forcing out-of-state retailers to collect taxes if they don’t have a physical presence in the state. But the company has shifted recently, with Amazon this winter collecting sales taxes in at least 10 states where it hadn’t previously. Neighboring Oklahoma announced last week that Amazon would begin collecting sales taxes in that state beginning in March.
Arkansas Gov. Asa Hutchinson hasn’t said whether he supports the proposals, but said last week that any additional tax revenue from online purchases should go toward additional income tax cuts. Hutchinson, a Republican, signed into law a $50 million income tax reduction in a bill that also creates a task force that will recommend deeper cuts before the Legislature’s 2019 session.
Republican Sen. Trent Garner, who voted against the Senate bill Monday, said the issue of online sales needs to be addressed at a national rather than state level.
“I think it’s something the federal government needs to step up and have it uniform across the nation,” Garner said. “I think that’s a better way to handle it than this state-by-state, piecemeal approach.”
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