Remote Sales Tax Legislation Poised for Potential Action - Now is the Time for Grassroots Outreach
Federal remote sales tax legislation, a longstanding priority for GFOA, stands poised for potential action, given the U.S. Supreme Court’s recent decision to hear a case to determine the validity of a South Dakota law requiring remote sellers to collect sales tax. As it currently stands, the Supreme Court is expected to have a decision on the case by the end of June. With this development, GFOA and other proponents of establishing a federal framework are actively seeking opportunities to advance bills like H.R. 2193, the Remote Transactions Parity Act (RTPA), or S. 976, the Marketplace Fairness Act (MFA).
Both RTPA and MFA have seen a few iterations over the last decade or so, as the issue of taxing remote sales is nothing new to Congress. The issue dates back to mail-order businesses, but the debate has been revived in recent years due to state and local governments becoming keenly aware of the impact on sales taxes (a result of the substantial growth of remote sales over the Internet). GFOA has supported bills like RTPA and MFA because they establish a federal framework in the form of two options: States would either adopt the minimum simplification requirements detailed in the bill, or they could begin collecting if they are a part of the Streamline Sales and Use Tax Agreement (SSUTA). Twenty-four states participate in the SSUTA, providing a framework for tax simplification and a forum for the business and government communities to collaboratively work through tax administration issues.
Whether it is in the court or Congress, we should see some sort of resolution to the issue this year. GFOA encourages members to reach out to their congressional delegations and urge them to cosponsor the legislation and call on leaders in both chambers to act on the bills. GFOA will continue to monitor and report developments as they occur.
See GFOA’s Marketplace Fairness Act & The Remote Transactions Parity Act Resource Center for more information.
Cosponsors Needed for Legislation to Restore Advance Refunding
Recently, the co-chairs of the bipartisan House Municipal Finance Caucus, Representatives Randy Hultgren (R-Ill.) and Dutch Ruppersberger (D-Md.), introduced legislation that would restore the ability for state and local governments to issue tax-exempt advance refunding bonds. Before it was eliminated by the sweeping tax reform bill signed into law last December, this provision allowed states and localities to save millions of dollars in debt service payments which ultimately benefits taxpayers. In 2017 alone, advance refunding issuances amounted to $91 billion (roughly 22 percent of issuances). By reducing debt service expenses, states and localities could be able to free up borrowing capacity for new investment in infrastructure and other important facilities. GFOA and other state and local government organizations fought to keep the provision out of the final bill, efforts that were ultimately unsuccessful despite bipartisan support to retain tax-exempt advance refundings.
GFOA urges members to reach out to their Representatives and ask them to support H.R. 5003 by cosponsoring the bill. Your direct outreach is critical to advancing this legislation in 2018. To help you with this outreach, GFOA has several resources including background information and talking points, and a template for a letter you can personalize to send to your Representative. Please e-mail a copy of any correspondence you send and feedback you may receive to GFOA’s Federal Liaison Center so we may follow up where appropriate.
Not sure of your congressional district or who your member is? Find Your Representative service will assist you by matching your ZIP code to your congressional district, with links to your member's website and contact page.
Infrastructure Proposal Released for Congressional Consideration
On Monday, February 12, the White House released an infrastructure proposal detailing plans for a comprehensive approach for public infrastructure in the United States. According to the plan, the federal government will fund $200 billion (from unspecified services), and state and local governments will close the gap for a total of $1.5 trillion in spending, with the help of the private sector. The $200 billion breaks out as follows:
- $100 billion for the Incentives Program allocated to the Department of Transportation, the Environmental Protection Agency, and the United States Army Corps of Engineers. Other agencies will be able to petition those agencies to gain access to some of those funds for approved projects. No state can receive more than 10% of all the funds allocated to the Incentives Program.
- $50 billion in block grants to a Rural Infrastructure Program, 80% of which would be distributed directly to state governors based on a set formula. The remaining 20% would be reserved for rural performance grants, which require states to submit an application detailing the merit of proposed projects.
- $20 billion would be allocated for the Transformative Projects Program, which seeks to fund projects that “fundamentally transform the way infrastructure is delivered or operated” and “...have significantly more risk than standard infrastructure projects.”
- $20 billion would go to increasing credit access for infrastructure projects by increasing the capacity of existing federal credit programs and expanding availability of tax-exempt Private Activity bonds (PABs). The proposal also aims to eliminate the alternative minimum tax provision on PABs and remove state volume caps on PABs for public-purpose infrastructure.
- $10 billion would go toward a revolving fund for financing “large-dollar real property purchases.”
Members of Congress and the White House officials have said that a bipartisan effort is necessary to produce a successful infrastructure bill. However, concerns have already been voiced over the fundamentals of the bill, specifically the source of federal dollars and the major appeal to private investment in public infrastructure.