The MFA allows individual states to compel online and catalog retailers, no matter where they are located, to collect sales tax at the time of a transaction, according to marketplacefairnessact.org. While the act is still seeking passage on Capitol Hill, City of Sparks Communications Manager Adam Mayberry told the City Council taking an early stance was an important step in supporting the city and the region.
Mayberry said the Nevada Department of Taxation is currently set up to take in sales tax receipts from internet sales.
“We believe this levels the playing field and it will bring additional revenue for the city,” Mayberry said. “The Nevada League of Cities and the National League of Cities have backed the legislation and the motion includes the act being part of the City of Sparks’ legislative platform.”
The National League of Cities said uncollected taxes from Nevada on all remote sales in 2012 equaled $344,923,618.
Mayberry cited the move by Amazon.com to collect sales tax in Nevada beginning in 2014, in the same manner as traditional brick-and-mortar establishments, as a sign the legislation is gaining momentum. The Las Vegas Sun reported Amazon’s tax collection is expected to raise “at least $16 million a year for the state.” The company has said it is obliged to add state and local sales taxes only on purchases from residents of states where Amazon has physical retail operations, which includes northern and southern Nevada.
Councilman Ron Smith, who manages the Scolari’s on Disc Drive in Sparks, said the MFA will only support the statewide agreement that Gov. Brian Sandoval reached with Amazon.
“I definitely support this (MFA),” Smith said. “Anyone working in retail knows that a level playing field is very important and that is exactly what this does. Everyone is charging sales tax and this really changes the game.”
Tray Abney, director of government affairs for The Chamber, spoke during public comment at the Sparks City Council meeting saying the MFA is not a new tax or a new idea, it is just “being enforced differently.”
“We are not trying to chase people away by endorsing the Marketplace Fairness Act,” Abney said. “This is really about fairness. It is not only about who gets the money.”
Lea Tauchen, senior director of government affairs for grocery and general merchandise for the Retail Association of Nevada, told the City Council that traditional brick-and-mortar retail was down 2 percent and online retail was up 15 percent, prompting the Retail Association of Nevada to support the legislative measure.
“The only change is in the collection mechanism because you are supposed to fill out forms if they are not collecting sales tax, and it is just not being done,” Tauchen said. “This will provide a fair, nationwide system.”
Jeff Cronk, financial services director for the City of Sparks, said sales tax in Nevada varies by county, causing the process of approving such legislation to taken much longer than originally thought.
If legislation passes in Nevada, the state will have two options to simplify its tax laws before making them public, according to marketplacefairnessact.org. One option would be for Nevada to adopt the Streamlined Sales and Use Tax Agreement (SSUTA), which would allow for collection on the “first day of the calendar quarter that is at least 90 days after enactment. The SSUTA was an 11-year development by 44 states and more than 80 businesses in the Streamlined Sales Tax Governing Board. Nevada has been a member of Streamlined Sales Tax since April 2008.
Option two would allow for state tax simplification by meeting essentially five conditions:
•Notify retailers in advance of any rate changes within the state
•Designate a single state organization to handle sales tax registrations, filings, and audits
•Establish a uniform sales tax base for use throughout the state
•Use destination sourcing to determine sales tax rates for out-of-state purchases (a purchase made by a consumer in California from a retailer in Ohio is taxed at the California rate, and the sales tax collected is remitted to California to fund projects and services there)
•Provide free software for managing sales tax compliance, and hold retailers harmless for any errors that result from relying on state-provided systems and data.