House OKs suspension of ‘destination’ sales tax

? Legislation suspending the state’s new destination-based sales tax system until Congress allows taxation on Internet purchases appeared doomed in the Senate after clearing the House.

The new law, adopted last year, requires vendors to collect all sales taxes that apply at the point of delivery rather than the point of sale. The result is that merchants must deal with hundreds of tax rates and track sales in more detail than ever before.

Under the bill, advanced by a 95-29 House vote, Kansas’ previous sales tax policy would be restored until Congress passes a law allowing sales tax on Internet sales.

But the 2003 law is supported by Democratic Gov. Kathleen Sebelius as well as the Republican leadership of the Senate, which voted 24-15 last month against suspending it.

Sen. Dave Corbin, who chairs the Assessment and Taxation Committee, said senators want to help businesses that are struggling with the new law but that he did not plan to have the committee consider suspending it.

“We’ve had hearings and we’ve voted on it,” said Corbin, R-Towanda.

And Senate Minority Leader Anthony Hensley, D-Topeka, said the 2003 law continues to enjoy bipartisan support.

The law is intended to position Kansas to capture what some officials say could be $100 million a year in sales tax on transactions made over the Internet.

But many merchants have complained that the law is burdensome, particularly for business that deliver goods to multiple locations. The Department of Revenue has estimated that 14,000 of the state’s 100,000 retailers were significantly affected by the law.

The House bill includes a provision granting a one-time, $1,000 income tax credit — to help cover the costs of complying with the new law — for businesses that collect less than $20,000 a year in sales taxes.