Online tax effort revived at last minute in Arkansas

Andrew Demillo
Associated Press

Little Rock, Ark. — A House committee revived a proposal Thursday forcing online retailers to collect Arkansas sales taxes, just two days after a lawmaker behind the bill declared it dead for this year’s session.

The measure advanced by the House Revenue and Taxation Committee requires companies without a physical presence in Arkansas that make more than $100,000 in annual sales or at least 200 transactions in the state to collect and remit sales taxes on those purchases.

Amazon this month began collecting Arkansas sales taxes on purchases made by state residents. The e-commerce giant recently announced it would begin collecting in every state that charges sales tax. Supporters of the measure say it’s needed to ensure other online retailers also collect the tax.

“This gives us an opportunity, as you all know, to level the playing field for our mom and pop businesses and to continue to do what’s right by the people of Arkansas and not reward out-of-state sellers,” Republican Sen. Jake Files told the committee before the vote.

The Senate measure, backed by Bentonville-based Wal-Mart, would require retailers that don’t collect and remit the tax to send information about purchases made by Arkansas residents to the state.

The proposal is expected to go before the House on Friday and faces an uphill fight to win final approval before the majority-Republican Legislature wraps up its session early next week. If the House approves the measure, it still faces one more vote in the Senate before going to the governor’s desk.

The proposal had failed three times previously before the panel, facing resistance from conservatives who called the move a new tax and Democrats who wanted the revenue directed to specific needs. A House sponsor of the bill on Tuesday told reporters he didn’t expect the bill to come up for another vote.

The committee rejected a proposal from Democrats to direct $100 million of the expected revenue toward highways. The rejected amendment also called for directing some of the money toward other needs, such as pre-kindergarten. State finance officials have not estimated how much additional revenue the state would see if the measure is enacted.

The top Democrat in the House said he expected the legislation to get bipartisan support in the chamber, but said he was still undecided on whether to back the bill. House Minority Leader Michael John Gray said he was concerned the measure would hit lower-income people disproportionately.

“There are many outside this Capitol building who see this as a new tax,” he said after the vote.

To avoid collecting taxes, Amazon had relied on a 1992 U.S. Supreme Court ruling that bans states from forcing out-of-state retailers to collect taxes if they don’t have a physical presence in the state. But the company had shifted in recent months.

The Arkansas bill, modeled after a 2016 law in South Dakota, is aimed partly at getting the high court to reconsider that 1992 decision. The U.S. Supreme Court last year rejected a challenge to a Colorado law requiring online sellers to notify customers about how much they owe in taxes.