Online sales tax bill first item on Monday’s legislative agenda
LB 284 — which would mandate that online retailers collect and remit sales tax on purchases made by Nebraska residents — is the first item up on the Legislature’s agenda this morning.
A 2018 ruling by the U.S. Supreme Court cleared the way for states to mandate collection of tax on online purchases. Current Nebraska statute, however, doesn’t explicitly mandate collection, which leaves room for online sellers to avoid collecting the tax.
LB 284 would require tax collection on sales by vendors who do at least $100,000 in sales or 200 separate transactions in Nebraska — the threshold set by South Dakota and upheld in the 2018 Supreme Court decision. The bill also would require that online marketplaces, like eBay and Amazon, also collect and remit for smaller vendors for whom they facilitate sales. This would further level the playing field for Nebraska’s brick-and-mortar retailers who have been at a competitive disadvantage against online sellers who don’t presently have to collect and remit sales taxes. According to the Sales Tax Institute, 13 states, including Oklahoma, South Dakota and Iowa, as well as the District of Columbia, have passed similar marketplace facilitator provisions.
The Legislative Fiscal Office estimates the collection of sales tax from major online retailers would increase revenue about $30 million to $40 million per year. This revenue estimate, which does not include taxes collected from marketplace facilitators, has already been factored into the Appropriations Committe’s biennial budget proposal. The roughly $10 million in annual revenue that the Legislative Fiscal Office estimates would be collected from marketplace facilitator sales, included in LB 284 has not been factored into the budget.
Not passing legislation requiring the collection of this tax could lead to a scenario in which some of that $30 million to $40 million is not collected. This would cause the shortfall the state currently faces to increase. Passing LB 284’s marketplace facilitator provision would mean the additional revenue could help balance the budget or fund other priorities.
