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Congressional Research Service Reports - Taxation, Date: February 22, 2006 1 (February 22, 2006)

handle is hein.tera/crstax0360 and id is 1 raw text is: Order Code RS22387 February 22, 2006 CRS Report for Congress Received through the CRS Web The Streamlined Sales and Use Tax Agreement: A Brief Description Steven Maguire Analyst in Public Finance Government and Finance Division Summary Sales taxes are an important source of revenue for most states. The expansion of Internet commerce, where vendors and customers are often in different states, has eroded part of that revenue stream. As a result of U.S. Supreme Court decisions, states are prevented from requiring remote (out-of-state) vendors to collect sales taxes. The Court noted that it would be too burdensome on interstate commerce for remote vendors to comply with each state's unique tax code. For this reason, several states are participating in an initiative to simplify and coordinate their tax codes - called the Streamlined Sales and Use Tax Agreement (SSUTA). The member states hope that Congress could be persuaded to allow them to require out-of-state vendors to collect taxes from customers in SSUTA member states. In the 109th Congress, two bills, S. 2152 (Enzi) and S. 2153 (Dorgan), have been introduced that would allow states that have adopted the SSUTA to compel out-of-state vendors to collect sales and use taxes. This report will be updated as legislative events warrant. Cameron Ackroyd, an intern in the Government and Finance Division of CRS, contributed to this report. Sales Taxes and Internet Commerce General sales and use taxes provide state governments with a significant share of total tax revenue each year. The use tax is the companion to the sales tax, applied to goods purchased from vendors outside the purchaser's state of residence.' Sales taxes generated about one-third, or approximately $198.4 billion, of the $593.5 billion of total Use tax burden is created by the use of a good or service. The use tax collection burden generally falls on the consumer, rather than on the retailer as is the case with the sales tax. For the remainder of this report, sales tax will be used to refer to both the sales and use tax. Congressional Research Service oe The Library of Congress

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