STATE BALLOT QUESTION 3 (Internet sales tax)

One thing most people would agree on is that the Legislature sure is persistent.

By nearly a 3 to 1 margin, voters rejected a 2008 ballot question to make it easier for the Legislature to levy sales taxes on Internet sales. Landslide defeat aside, lawmakers put virtually the same question back on this November’s ballot.

In Question 3, voters are asked to let legislators change tax laws “to resolve a conflict with any federal law or interstate agreement” dealing with collection of sales taxes. Currently, the Legislature needs voter approval for such changes.

The intent of the question is to let the state collect sales taxes on Internet purchases made by citizens as soon as possible after Congress gives that authority. Otherwise, Internet sales taxes could not be collected until after voters approve during the next general election. That could be more than a year away.

Nevada could have collected more than $114 million last year in sales taxes on Internet purchases, and the potential take is expected to increase to more than $330 million by 2012, according to the National Conference of State Legislatures.

The federal government now prohibits states from forcing Internet sellers to collect sales taxes except in cases where the seller also has a physical presence in the state.

That is unfair to Nevada businesses, said Assemblyman James Settelmeyer, R-Gardnerville. His bill to put Question 3 on the ballot passed unanimously.

“To me, this creates a level playing field for our businesses,” he said. “Now we have a situation where Main Street businesses must collect the 7 percent to 8 percent in sales taxes, while e-commerce businesses do not. Give mom and pop businesses a fair chance to compete.”

Congress has rejected several Internet sales tax efforts pushed by states, but U.S. Rep. William Delahunt, D-Mass., in July introduced the Main Street Fairness Act, which is designed to require sales tax collection on all Internet sales.

Nevada Taxation Director Dino DiCianno, the state representative on the Streamlined Sales Tax Project board, said he doesn’t know whether the act will win approval.

But DiCianno pointed out that most states are suffering budget woes and implementation of the act would provide new revenue.

Settelmeyer said voters likely will reject the question again unless businesses, chambers of commerce and others sell voters on the need.

He emphasized that a yes vote is not a vote to increase taxes because the sales tax rates already are in place. He added citizens also have been required by law for years to pay sales taxes on these purchases.

But DiCianno said the state cannot force buyers to pay the taxes.

“It is strictly voluntary,” he said. “The (Main Street Fairness Act) will require those who sell to you to collect the tax up-front and remit it to us.”

If Question 3 is rejected again, Settelmeyer vows to introduce legislation that bars sales taxes on Internet purchases, saying “If it is clear people don’t want it, then why have the law on the books?”

Contact Capital Bureau Chief Ed Vogel at or 775-687-3900.

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