House Judiciary Chairman Robert Goodlatte (R-VA) laid out a set of principles for consideration that included a provision giving individual states the right and responsibility to ensure compliance by their own online retailers for the collection of sales tax, and requiring that the collection of such taxes be made as simple for online retailers as it is for ‘brick-and-mortar’ stores -- a mandate that would presumably require the development of uniform, easy-to-use software.
These provisions are aimed at satisfying the complaints voiced by Republican lawmakers that complying with the new law would impose an onerous burden on online retailers because there are an estimated 9,600 states, counties, and localities that have different sales tax rates and rules. New Jersey is among a minority of states that does not allow the imposition of local sales taxes by all of its counties and municipalities.
Holub noted that New Jersey is one of about 25 states participating in a federal streamlined-sales task group that is charged with coming up with uniform rules for the imposition of online sales taxes across state lines, but acknowledged the complexity of the issues involved.
“It’s not just a question of what you tax, but how you define it,” Holub explained. “Take, for example, the Twix bar. Is it a candy or a cookie? Twix is a chocolate bar, but it has flour. If it is candy, it is taxable. If it is a cookie, it isn’t. States need to come to agreement on what the Twix bar is. These are the types of complicated questions that need to be resolved.”