As described so far in this chapter, there are a number of Internet and e-commerce tax issues in need of resolution at all levels of government. The issuance of the Treasury study in 1996 followed by the issuance of similar reports by other industrialized countries, as well as work done by a federal commission in 1999–2000, has led to a helpful discussion of the issues and possible solutions. Notable activities are briefly summarized below.
Federal Advisory Commission on E-commerce
In addition to imposing a moratorium, the Internet Tax Freedom Act (described earlier) created a 19-member Advisory Commission on Electronic Commerce (ACEC). The members included 8 representatives of state and local governments (including one from a state with no sales tax and one from a state with no income tax), and 8 representatives from the e-commerce industry (including small businesses), telecommunications carriers, and local retail businesses, and consumer groups.
The remaining 3 members were the Secretary of Commerce, the Secretary of the Treasury, and the United States Trade Representative. The ACEC was to conduct a thorough study of all levels of tax with respect to e-commerce and report to Congress in April 2000. The ACEC report could contain legislative recommendations if they were tax and technologically neutral and were approved by at least two-thirds of the Commissioners
Streamlined Sales Tax Project (SSTP)
The SSTP involves a group of representatives from over 35 states and the District of Columbia who is working together to create a Model Act and Agreement for a uniform and simplified sales and uses tax system. The language was approved by the participating states in December 2000. While additional work is needed to fill in some missing pieces, several states have reviewed the Model
Taxation Reports of Various Countries and the OECD
In addition to the United States, the OECD, Australia, Canada, the European Union, and a few other industrialized countries have issued extensive reports on e-commerce tax issues. Common themes in these reports include.
E-commerce is a new business model for which existing tax systems were not designed. While some e-commerce transactions fit clearly within existing rules, many do not. The issues are complicated and global in nature. Efforts have been underway since at least 1996 to address these issues at the international level, as well as state and local levels. Work on identifying the specific issues and possible solutions will likely continue for many years due to the scope and range of issues. At the international level, the OECD is the likely avenue for resolving tax issues due to the purpose of the OECD and the depth of study it has performed to date.
At the state and local levels, states will continue to work on simplifying their sales and use tax system in the hopes of being able to collect sales tax from remote vendors. Unfortunately, the states do not have a strong record of working together to resolve issues and not all states are participating in the SSTP. As the state tax debate continues, so will the discussion of the proper role of Congress in helping to resolve the issues.
Finally, although there has been little attention to them, a few e-commerce issues at the federal level will likely be addressed in the next few years. The issues and discussions present an opportunity for taxpayers, tax practitioners, and others to provide input to the debate to shape the future redesign or design of tax systems.