/Ruling OKs online tax collection, could lead to special session on infrastructure

Ruling OKs online tax collection, could lead to special session on infrastructure

Republican Governor. Phil Bryant had indicated in May that he would call a special session in the event that the Supreme Court overturns a 1992 ruling which said that states couldn’t force retailers to collect the tax unless they were physically located in the state. In a 5-4 decision, the Supreme Court overturned this ruling. Mississippi charges a 7.5% tax on most retail products. To collect the tax from online retailers, Mississippi will not have to change its laws. Senator Hob Bryan (D-Amory) stated that the state does not have to do anything. “We have a law which allows us to collect the used tax from almost everyone who moves. “The courts were stopping us from doing so.” Mississippi’s current law requires that companies with no physical presence in Mississippi collect the tax. The 1992 Supreme Court decision made it impossible for them to do that. Kathy Waterbury, spokesperson for the Department of Revenue, stated that the current law allows them to collect the use tax from any company that has had sales of more that $250,000 within the previous 12 months. Waterbury replied via email that “we don’t anticipate any changes for DOR.” “Laws and regulations are in effect. Every day we register new companies, so there is nothing new. “Taxpayers can register and file online. But, what could be up for debate in a special session? Where the money that the Supreme Court ruling may have allowed to go? The current law states that the funds are paid to the state general fund, which provides revenue for education and health care. The Department of Transportation, however, is not funded by the general fund. Instead it is funded through specific taxes, primarily the motor fuel tax. Governor Bryan and others discussed the possibility of redirecting use tax revenue from online retailers to transportation in order to address major infrastructure needs at both the state level and at local levels. Bryan and others recognize that the state has significant infrastructure needs. However, the online use tax revenue will be needed to address the insufficient funding for education and other areas due to major tax cuts by the Legislature. The Supreme Court’s ruling raises questions about how much state money it will receive. Herb Frierson, Revenue Commissioner, reached an agreement early 2017 with major online retailers. This resulted in them collecting 7 percent use tax on items they sell to Mississippians and then remitting the revenue to the state. The state collected $318 million in use taxes revenue for the fiscal year that ended June 30, with $63 million collected by online retailers. There are approximately 22,000 collectors of use tax, with 2,160 being voluntary collectors before Thursday’s Supreme Court decision. 135 of those collectors have remitted the use tax collections to this state in 2016. The University Research Center previously estimated that the state would have received between $105 million and $122 from online retailers in 2016 if the 1990s Supreme Court ruling hadn’t been in effect. Mississippi Attorney General Jim Hood, whose office challenged the 1990s Supreme Court ruling, stated Thursday that “Today’s decision is a victory to our Main Street merchants of Mississippi. They now have an equal playing field with international, large and out-of-state corporations. The United States Supreme Court has been convinced by our attorneys general that the Constitution of the United States protects the state from federal legislative or judicial overreach. “I don’t think that I have lost in any of these cases, where large international corporations try to preempt state laws designed for consumers to protect our consumers to protect our lawmakers,” the governor indicated that he would prefer to get agreement from the legislative leaders before calling a special session to address transportation issues. This includes transferring internet tax collections to infrastructure requirements. Laura Hipp, spokesperson for the Lt. Governor, spoke out in support of the ruling. Tate Reeves stated: “The constitutionality to collect online sales tax from retailers outside of the state has always been an issue that either the U.S. Supreme Court, or Congress, to decide. Today the justices decided to level the playing fields for retailers across Mississippi. Lt. Gov. Reeves is looking forward to continued conversations with Gov. Bryant and Speaker Gunn discuss how this policy should look in Mississippi and the communities it serves, and how to prioritize revenue that is generated for state needs.”