As many states wind down legislative sessions, Internet tax legislation continues to be debated in states desperate for revenue. Here is a quick rundown of bills around the country.
In Connecticut, an affiliate nexus Internet tax was passed as part of the Senate’s budget plan (HB 6387 and SB 1007). Now on the books in five states, the bill would require out-of-state online retailers to collect tax if they merely advertise with affiliates in Connecticut. The biggest problem we consistently point out: Internet retailers simply end their advertising agreements, the state never collects more revenue, and advertisers lose their jobs (see the paragraph on North Carolina’s repeal effort at the bottom).
Meanwhile, Alabama legislators are considering a bill (HB 365) that would force out-of-state retailers to notify consumers of their obligation to pay taxes on their purchases. The legislation is under consideration despite the fact that a federal District Court in Colorado halted implementation of a strikingly similar law, noting it clearly violates the Commerce Clause and U.S. Supreme Court precedent by significantly burdening out-of-state retailers.
Yet, while others are introducing bills to tax Internet sales, North Carolina – one of the first states to pass an Internet tax – is seriously considering two measures (HB 867 and SB 715) that would repeal the law. North Carolina has witnessed first hand the negative repercussions of the Internet tax. Since its enactment, the law has failed to collect any additional revenue for the state or level the playing field with in-state businesses, instead simply costing North Carolina advertisers their jobs.