Kansas House panel advances bill to tax online retail sales
Topeka ? A bill that would impose retail sales taxes on virtually all online purchases made in Kansas is now on its way to the full House.
The House Taxation Committee voted Wednesday to advance a bill that would impose that tax, regardless of whether the retailer has a physical presence in Kansas.
House Bill 2756 represents a kind of challenge to a 1992 U.S. Supreme Court ruling that said states can only tax so-called “remote” sales if the retailer has a physical presence or “nexus” in the state.
For that reason, most sales made through online retail outlets run by companies that also operate brick-and-mortar stores such as Walmart and Best Buy are already taxed.
Committee chairman Rep. Steven Johnson, R-Assaria, however, said the House bill redefines what constitutes a physical presence using a concept some have called a “cookie nexus,” which essentially says if a company operates a website or smartphone app that is accessible in Kansas, then those outlets constitute a physical presence in the state.
If the bill passes, beginning Jan. 1, 2019, Kansas would start collecting sales tax not only on online sales of merchandise, but also on digital music, video and software downloads, and even items purchased on “marketplace” websites such as eBay that only provide a platform for individuals to buy and sell items.
It would also apply to companies, including Amazon, that, in addition to selling their own merchandise, act as third-party distributors or “fulfillment centers” for other online outlets not currently subject to sales tax.
It would apply to any online retailer that makes either a minimum of $50,000 in sales or 100 transactions in a year.
In essence, Johnson said Wednesday, it would apply to the purchase of any item which, if purchased in a brick-and-mortar store, would also be subject to sales tax.
A 2017 report by the U.S. Government Accountability Office suggested if states had more power to tax online sales, the 45 states plus the District of Columbia would stand to gain a combined $8.5 billion to $13.4 billion a year in revenue.
Of that, the GAO estimated Kansas would gain between $113 million and $170 million a year.