Omnibus not expected to include online sales tax bill

Online sales tax legislation is not expected to be included in the omnibus spending bill set for votes this week, lawmakers said Monday evening.

“I don’t believe that’s in there,” House Majority Leader Kevin McCarthy (R-Calif.) said.

Rep. Kristi Noem (R-S.D.) had been pushing leadership to include her measure, the Remote Transactions Parity Act, into the spending measure so that Congress acts on the issue before the Supreme Court issues a ruling in an upcoming case. 

Her bill would allow states to require out-of-state online retailers to collect their sales taxes, if the states simplify their sales-tax laws.

{mosads}While her bill has bipartisan support and the backing of groups representing state and local governments and retailers, the online sales tax issue has strongly divided lawmakers in both parties. Conservative lawmakers and outside groups urged Congress not to include the Noem’s bill in the omnibus, as did Democrats in states without sales taxes.

Noem on Monday vowed to try to get her bill passed before the Supreme Court rules. The court is hearing oral arguments in a case on the online sales tax issue next month.

“I’m not a quitter, so yes, I’m going to keep working it,” she said.  

When it rules in its upcoming case, the Supreme Court may decide to overturn its 1992 decision finding that states can’t collect sales taxes on remote purchases unless the seller has a physical presence in the state.

Noem said if the court rules that way, “we’re going to have chaos.”

“We’re going to have blue states going after businesses in red states, auditing small-business owners. Moms making earrings in their basements, trying to make a little money for their family, are going to get audited by states and local cities, and it’s going to be devastating for them, she said.

“So my bill would have protected us from that, and I’m very disappointed that our leadership team didn’t see that that was necessary,” she added.

—Juliegrace Brufke contributed.