[Congressional Record Volume 151, Number 166 (Tuesday, December 20, 2005)]
[Senate]
[Pages S14190-S14194]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]

      By Mr. DORGAN:
  S. 2153. A bill to promote simplification and fairness in the 
administration and colleciton of sales and use taxes; to the Committee 
on Finance.
  Mr. DORGAN. Mr. President, I have been working closely with Senator 
Mike Enzi of Wyoming for several years now on Federal legislation that 
encourages and rewards State and local governments that radically 
simplify their sales tax systems by granting them authority to require 
large sellers to collect taxes on remote sales after substantial 
simplifications are implemented. This year we have delayed 
reintroducing related legislation that we cosponsored in the last 
Congress, S. 1736, primarily due to concerns that some parties have 
raised about the bill's small business exemption language.
  After months of negotiation, there's still disagreement among the 
stakeholders about how the bill should define small remote sellers who 
would be exempted from the bill's sales tax collection requirements. 
Regrettably, the small business exemption issues have not been resolved 
to the satisfaction of all parties and Senator Enzi is re-introducing 
essentially our same proposal from the 108th Congress as he promised. I 
certainly respect his right and decision to do so.
  However, I have been working on small business language that I think 
is a fair approach and will greatly improve the odds that this bill 
will become law.
  The bill I am introducing today is identical to the bill that Senator 
Enzi is introducing today in every respect--except one. Instead of 
putting a small business exemption in the bill with a specific dollar 
threshold, my proposal sets up a process that I believe will help us 
get to the right answer. Under my proposal, the Small Business 
Administration (SBA) is required, after considering all relevant 
factors and soliciting input from the Treasury Department, the 
Streamlined Sales Tax Governing Board and others, to develop a 
rulemaking and propose to Congress a definition of those small sellers, 
including small businesses, which would not be required to collect and 
remit sales and use taxes. My bill provides

[[Page S14194]]

for the expedited consideration of SBA's proposal by the U.S. House and 
Senate and takes steps to ensure that a small sellers' exemption will 
ultimately be approved by Congress. States would be allowed to require 
impacted remote sellers to collect sales taxes only after federally 
mandated simplification is accomplished and a small business exemption 
is approved by Congress.
  All of the other parts of my bill are identical to those included in 
Senator Enzi's bill. These provisions also deserve our immediate 
attention. There are over 7,000 tax jurisdictions across the country 
that rely on sales taxes to fund a range of local activities, from 
education and fire suppression to police protection and road 
construction. But billions of dollars in needed sales tax revenues go 
uncollected year after year in many jurisdictions due to a ruling by 
the U.S. Supreme Court in 1992 that said current State and local sales 
tax systems impose an undue burden on sellers without a physical 
presence in each State.
  Internet and catalog sellers have argued that collecting and 
remitting sales taxes for thousands of different tax authorities is 
exceedingly complex. This is a legitimate complaint. And I understand 
why the U.S. Supreme Court in its Quill decision said that States and 
localities could not require sellers to collect sales tax on remote 
sales until the States and localities have first dramatically reduced 
the complexity and burden of collecting sales taxes.
  The States and localities have stepped up to the challenge outlined 
in the Quill decision. For five years now, the States have been working 
with the retail community and local governments to develop a 
streamlined and uniform sales tax system agreement that will alleviate 
the burden of sales tax collection on local retailers and remote 
sellers.
  The Streamlined Sales and Use Tax Agreement, which was approved by 34 
States and the District of Columbia in November 2002, requires 
participating States to comply with dozens of stringent simplification 
requirements that streamline how State sales and use taxes are 
identified and collected. By early next year, 19 States will have 
enacted legislation to bring them into compliance with the Agreement 
and will be members of its Governing Board.
  By harmonizing their State sales and use tax rules, bringing 
uniformity to definitions in the sales tax base, significantly reducing 
the paperwork burden on retailers, and incorporating a seamless 
electronic reporting process, compliance with the Agreement will result 
in a significantly reduced tax collection burden on all sellers.
  As the volume of remote on-line retail sales grow, states are losing 
more and more sales tax revenues. An estimated $15 billion in sales and 
use taxes will go uncollected in 2005. This threatens the future 
ability of states and localities to make critical investments in even 
the most basic community services, while forcing local retailers who 
are required to collect sales taxes today to compete with large remote 
competitors who are not. Senator Enzi and I are determined to address 
this problem.
  I think that the legislation I am introducing today strikes a 
reasonable balance between the interests of consumers, local retailers, 
remote sellers and the states. Having said that, I will be working with 
Senator Enzi early in the next session to see if we can put together a 
single approach that would address any remaining concerns about the 
small business exemption and help us move this legislative effort 
forward in the next session.
  We will also have an opportunity to more fully examine some issues 
raised by the representatives of local governments and some Indian 
tribes about the impact of our initiative on their constituencies.
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