St. Lawrence County legislature asking state to collect sales tax from out-of-state retailers
CANTON – The St. Lawrence County Board of Legislators is calling on New York State Senate and Assembly to collect sales tax on items purchased on the internet from out-of-state retailers.
Under current New York State law, retailers are required to collect sales tax on their wares only if the seller is based in New York — a "physical presence" is required to determine liability, according to a 1992 Supreme Court ruling in Quill Corp. v. North Dakota.The Supreme Court this term will hear a case emanating from South Dakota that challenges this precedent. If a retailer is based elsewhere, New York cannot require it to collect sales tax and many do not — individual New Yorkers are supposed to declare what they owe on their state income tax returns, but St. Lawrence County and the New York State Association of Counties is working to change all that.
“It is a matter of fundamental fairness,” St. Lawrence County Administrator Ruth A. Doyle said in a prepared statement. “The challenge is complex in that retailers in New York are at a competitive disadvantage against on-line retailers as those on-line retailers do not have to collect sales tax for purchases in New York State. The process for collection should be less complex for small business owners as well. The potential to begin collecting sales tax for on-line sales would be a source of revenue, which could assist in a relieving the burden in the overall tax levy collected from property taxes.”
Currently, online marketplaces such as Amazon and eBay are required to collect sales tax from New York residents only if the seller is located within New York State. Essentially these online providers are providing a tax-free marketplace for sellers outside of the state. The Internet Fairness Conformity Tax would ensure New York’s existing sales tax laws are enforced fairly across most sales platforms, regardless of whether it is in a storefront or over the Internet. This proposal would require the online marketplaces to collect sales taxes on any products sold to a New York residents from sellers located both within and outside of New York State.
In a release issued by the county St. Lawrence County Board of Legislator’s Finance Committee Chair Joe Timmerman echoed Doyle’s sentiments, “St. Lawrence County property taxpayers cannot afford to continue to subsidize these large businesses that do not collect the same sales tax revenue as our local storefronts. In the absence of the Internet Fairness Conformity Tax Act, that is exactly what will continue to happen. We stand firmly supportive of inclusion of the act in the State budget negotiations and urge our representatives in the Senate and Assembly to enact this common sense proposal that evens the playing field for small businesses.”
According to the statement issued to the press, the proposal allows New York State to adapt to the rapidly changing retail Internet economy by leveling the playing field for brick and mortar stores as online marketplaces continue to grow and expand rapidly. In 2016, online marketplaces in the United States transacted over $110 billion worth of purchases.
A 2017 Government Accountability Office (GAO) report estimates that New York State is not collecting between $500 million and $900 million annually due to sales transactions occurring over the Internet. The Internet Fairness Conformity Tax proposal would close a substantial portion of the gap. According to the Governor’s Office, in the first year of implementation the proposal is estimated to generate $318 million — $159 million in revenue for the counties and another $159 million for the State.
County Executives recently met with Governor Andrew M. Cuomo in Albany to discuss the positive fiscal impact it would have on Main Streets across the state. The New York State Association of Counties has also made this proposal one of their top budget priorities. Similar marketplace fairness legislation has passed nationwide in states such as Washington, Pennsylvania, Minnesota and Rhode Island.