LITTLE ROCK — The Senate on Monday approved a bill to require large Internet sellers like Amazon to collect sales taxes on customers’ purchases in Arkansas.
In a 23-9 vote, the Senate approved Senate Bill 140 by Sen. Jake Files, R-Fort Smith. The bill goes to the House.
The bill would require an out-of-state seller that sells more than $100,000 worth of products or makes at least 200 transactions in Arkansas in a calendar year to begin collecting sales taxes. It also would allow the state to take a seller to court to recover sales tax revenue.
Presenting his bill on the Senate floor, Files said that under current state law, an Arkansas resident who buys a product online is supposed to fill out a form and mail a sales tax payment to the state, but he said that system is cumbersome and impractical. He said his bill would not create a new tax but would shift the onus from the buyer to the seller for remitting the tax to the state.
“When somebody emails me or texts me about this being a new tax or a tax increase, I’m quick to tell them that this is on the books now,” he said.
Files said several businesses in the Fort Smith area have told him the bill is needed because they have to compete with outfits like Amazon that can offer the same products without charging a state sales tax.
The state Department of Finance and Administration has said it cannot estimate how much revenue the bill would generate. Files said one study estimated that sales taxes on Amazon transactions alone would have generated $32 million for the state in 2014, and he said he has heard other estimates as high as $100 million.
“Let’s say it’s somewhere in the middle,” he said.
Files also said a separate bill is being drafted that would charge the state Tax Reform and Relief Legislative Task Force with determining how revenue generated by his bill could be used to pay for future tax cuts. The task force will be created under legislation passed and signed by the governor earlier in the session.
Sen. Gary Stubblefield, R-Branch, who voted against the bill, said after the Senate adjourned his constituents are mostly opposed to the bill.
“They look at it like it’s a (new) tax,” he said.
But Stubblefield said he would have voted for the bill if it included language requiring the sales tax revenue to be used for future tax cuts.
Files said he did not include language about future tax cuts in his bill because “if this actually is challenged, we didn’t want to muddy the waters any with the courts going, ‘Hey, basically you’re just taking a tax that’s being used over here and using it somewhere else.’”