Rhode Island considers imposing taxes on online sales
PROVIDENCE, R.I. (AP) — Rhode Island lawmakers are considering another attempt to force online retailers to collect sales taxes and remit them to the state.
The bill’s sponsor, Rep. Brian Kennedy, a Hopkinton Democrat, said Rhode Island loses more than $30 million a year because it can’t tax out-of-state retailers.
A competing bill would repeal the state’s last such attempt: a 2009 law known locally as the “Amazon tax” that led the Internet e-commerce giant to sever its ties with its business affiliates in Rhode Island.
The House Finance Committee held hearings on both bills last week.
States around the country have long sought to get Amazon and other big online retailers on their sales tax rolls. Peder Schaefer, associate director of the Rhode Island League of Cities and Towns, said local stores have become little more than showrooms for customers who buy wares online using their smartphones or when they get home.
Efforts to get online retailers collecting sales taxes have found their biggest obstacle in the U.S. Supreme Court. The court ruled in 1992 that states cannot impose sales taxes on businesses unless they have a physical presence in the state.
South Dakota recently enacted a law and filed a lawsuit against several remote retailers that aims to overturn the 1992 ruling.
Kennedy said it’s a test case and inspired by a larger coalition of states hoping to prod the courts or the U.S. Congress to act.
He wants Rhode Island to join that movement. His bill would impose penalties on out-of-state companies that don’t comply.
But Republican Rep. Daniel Reilly, of Portsmouth, said it would be bad policy to threaten companies and create a whole new regulatory scheme just to prod federal action.