Taxation committee drops Internet sales tax amendment

CARSON CITY – A bill amendment that would have required Internet retailers – not consumers – to track and pay sales taxes on online purchases to the state won't clear the Assembly Committee on Taxation, meaning the effort is likely dead for the remainder of the legislative session.

The Retail Association of Nevada proposed the amendment to Senate Bill 34, saying it would generate as much as $16 million annually in sales tax collections and create a level playing field for online and real-world stores. The bill, a noncontroversial measure making administrative changes sought by the state Department of Taxation, passed committee Thursday without the Internet amendment.

Concerns about whether the amendment would prompt online retailers such as Amazon.com to pull operations from Nevada or jeopardize the state's ability to participate in a multi-state effort to create a federal system for collecting online sales tax scuttled the proposal.

"What is important to me is what is going on in other states," said committee chairwoman Marilyn Kirkpatrick, D-North Las Vegas.

Currently, states can collect sales tax on Internet purchases consumers make only from companies with a physical presence in the state. The burden of collecting the sales tax falls on the consumer, and few residents go through the trouble of downloading the forms from the taxation department, calculating the amount owed and sending a check to the state.

Under the amendment, that burden would shift to retailers.

State-by-state efforts to collect the taxes could undermine national efforts by the Streamlined Sales Tax Governing Board. Lobbyist John Griffin on Tuesday told the committee Amazon would rather collect and remit sales taxes under a uniform, federal system.

To avoid complications associated with a state-based system, he said, Amazon would consider moving out of Nevada. Amazon operates a warehouse and shipment center that employs about 1,300 people in Fernley.

Retail Association lobbyist Bryan Wachter said the group isn't planning to attempt to attach the amendment to any other bills. He said the association may revive the issue next session, an effort Kirkpatrick said she would support.

"We look forward to working with her to get this prepared for next session," Wachter said.