The U.S. Senate Commerce Committee, which is considering two controversial issues related to Internet taxation, was told last week by online retailers that dot-coms shouldn't be forced to collect sales taxes unless state tax rules are simplified and retailers receive some reimbursement for collection costs. There is one tax rate per state instead of thousands of taxing districts that currently exist.
All states agree on uniform definitions of what constitutes a taxable item.
Comfort, in an interview after he testified at a Commerce Committee hearing, said complying with any tax collection requirement would also be expensive - potentially costing millions of dollars in software development and personnel expenses. Under two previous rulings by the U.S. Supreme Court, a business isn't required to collect sales taxes unless it has a physical presence in the state where the customer resides. State governments are trying to get Congress to change that restriction, fearing that they will eventually lose significant sales tax revenue if so-called remote sellers continue to be given a free pass from collecting taxes. At last week's hearing, the Commerce Committee heard conflicting views on how to approach the Internet tax issue. But other corporate executives who testified backed up Comfort's contention that companies can't begin to consider collecting sales taxes until the rules are simplified.