CHEYENNE – A committee of state lawmakers voted Friday to advance a bill that would require large online retailers to collect sales tax on purchases made by Wyoming customers.
Members of the Legislature’s Joint Revenue Interim Committee voted to send the bill to the full Legislature when it convenes in January.
Supporters of the measure say such a law would even the playing field for businesses in Wyoming.
That’s because customers may be inclined to buy items online instead of at Wyoming businesses to avoid paying sales tax.
To be subject to having to collect sales tax under the bill, a business would have to conduct $100,000 in sales or 200 separate transactions in Wyoming annually.
That means businesses with small operations or that only occasionally sell to Wyoming customers would be exempt.
Enforcement of the law would be through the state Department of Revenue.
Sen. Ray Peterson, R-Cowley, co-chairman of the Revenue Committee, said it comes down to not creating an advantage for large online retailers over local businesses.
“It’s not a new tax; it’s the same tax we charge at our Main Street businesses,” Peterson said. “It’s a fairness issue with me.”
Peterson also said the bill would help Wyoming diversify its revenue streams.
“This is just one of those areas we aren’t fully assessing the sales tax,” he said.
Peterson said he expects the bill to pass the full Legislature.
Rep. Mike Madden, R-Buffalo, the other Revenue Committee co-chairman, said it was a “good decision” to send the bill forward.
He said committee members had received letters in opposition to the proposed law from groups representing retailers the law would affect.
But buyers pay sales tax, not retailers themselves, so the bill is not asking retailers to pay more money themselves, he said.
Further, Madden said, Wyoming is part of the multi-state Streamlined Sales Tax group, which has resources to make it easy for retailers to collect state and local sales taxes.
However, similar laws passed around the country, including in South Dakota and Alabama, are under court challenges, as the laws could conflict with a 1992 U.S. Supreme Court ruling.
That year, the high court ruled in Quill Corp. v. North Dakota that retailers that did not have a physical presence in a state could not be forced to collect sales tax.
The case stemmed from the state of North Dakota attempting to force Quill, an office supply company often associated with mail-order catalogs, to collect North Dakota sales tax on purchases made by entities in North Dakota.
But that case was before the proliferation of the internet and online shopping.
In South Dakota’s case, the Legislature there knew the law, passed earlier this year, would be challenged. Lawmakers there are hoping the case will lead to the U.S. Supreme Court revisiting the 1992 ruling in light of new technology.
Madden acknowledged the court cases and said companies will have to justify why they don’t want to administer the tax.
“Sales tax is a state sovereignty issue, and it’s based on the fact that it’s a tax upon the citizens, it’s not a tax on them,” he said.
Wyoming could stand to gain between $23 million and $46 million annually if online sales tax were collected, the state Department of Revenue has said.
During a presentation by the Wyoming Association of Municipalities later in the Revenue Committee’s meeting, Cheyenne Mayor Rick Kaysen was asked about the proposal.
“We are interested in that going forward as well,” he said. “We hear locally it’s hard for the mom-and-pop shops to compete.”