Last week, we debated LB44, bill that requires remote sellers (online retailers without a physical presence in our state) to collect and remit sales tax if their gross revenue in Nebraska exceeds $100,000 or their sales in Nebraska consists of 200 or more separate transactions. Requiring remote sellers to collect sales tax on purchases can help add between $30-$40 million annually to the state’s general fund. This is money that can help close the budget deficit and is desperately needed.
Right now, when people purchase items online, they should be tracking those purchases and paying the use tax on their 1040 Form during tax season. However, in 2012, the Department of Revenue reported over 11,000 people paid about $850,000 in taxes, and estimated about $45 million in taxes were owed to the state. That was five years ago which means it is possible that Nebraska has missed out on over $100 million in lost tax revenue.
LB44 is not a tax increase. It closed a loophole and only requires online retailers to follow the law and collect and remit sales tax to the state. It is way past time that they do what local retailers have been doing for many years, leveling competition among retailers. Beginning in January of this year, Amazon, the largest online retailer, voluntarily began collecting sales tax for online purchases in the state. It is expected that Amazon will collect over $20 million annually for Nebraska. That is in addition to revenue that LB44 would collect from other online and catalogue retail sources.
At the committee hearing, LB44 was supported by many organizations, including the Nebraska and Lincoln Chambers of Commerce, the Farm Bureau, Nebraska Retail Federation and the League of Municipalities. Additionally, many small, locally owned businesses from across the state came out in support of this legislation. I do not think the status quo is fair to local retailers who are required to collect the tax, while out of state online retailers do not have to collect it. If main street businesses close, it obviously hurts the local community. I support this legislation because it will help even the competitive playing field with online retailers.
LB44 advanced from General File on a 28-13 vote, with many senators not voting or absent for the vote. The Governor has vowed to veto this legislation should it get to that point, so LB44’s still has some challenges ahead before it becomes a law. The legislature will revisit this bill on Select File in the next week or two.
As always, if we can be of assistance to you in any way, please do not hesitate to contact my office. My door is open and I have made it a goal to be accessible to the constituents of our district. Please stop by any time. My e-mail address is email@example.com, and the office phone number is 402-471-2756. David and Katie are always available to assist you with your needs. If I am not immediately available, please do not hesitate to work with them to address any issues that you may need assistance.