SENATE BILL REPORT

SJM 8031

BYSenators West, Smitherman, Lee, Owen, Warnke, Gaspard, Sellar, McDonald and McMullen

Requesting that the United States Congress pass legislation allowing states to collect sales tax on out-of-state mail order business.

Senate Committee on Economic Development & Labor

Senate Staff:Charles A. Woods (786-7911)

                  February 19, 1988

AS PASSED SENATE, FEBRUARY 16, 1988

BACKGROUND:

Since the 1967 U.S. Supreme Court ruling in Bellas Hess v. Illinois Department of Revenue, states have not been able to require out-of-state mail order businesses to collect and remit to the state sales or use taxes even though goods were being sold to the residents of the state.  The Advisory Commission on Intergovernmental Relations estimates that Washington lost out on $60 million in tax revenues to out-of-state catalog sales in 1987, and that catalog and telemarketing sales will increase by 400 percent nationwide in 1988.

SUMMARY:

The U.S. Congress has before it HR 1242, legislation which would grant to any state the authority to impose sales and use taxes on goods sold by out-of-state catalogs or telemarketing firms to residents within that state.  Firms would be required to collect and remit those taxes if they do more than $12.5 million in business nationwide or $500,000 within any particular state.  This memorial requests that the members of the Washington state delegation to Congress, the Governor of Washington, and the President of the United States to support the passage of HR 1242.

Appropriation:    none

Revenue:    none

Fiscal Note:      none requested