Nebraska online sales tax proposal dies without vote

May 5, 2017 GMT

LINCOLN, Neb. (AP) — An effort to level the playing field for brick-and-mortar businesses and bring in millions of dollars in revenue by requiring online retailers to collect or report sales tax is dead for the year in the Nebraska Legislature.

Sen. Dan Watermeier of Syracuse, the bill’s sponsor, let debate end on the measure without asking for a vote Thursday because several supporters were absent. He said he intends to bring it back next year and work with Gov. Pete Ricketts, who opposed the measure.

The bill would require online retailers with 200 transactions or $100,000 in revenue in Nebraska to collect sales tax or send detailed records to customers and the state to ensure customers pay the tax.

Nebraska law already requires customers to pay sales tax on online purchases through their annual income tax returns, but few do. State officials estimate the measure could generate an additional $30 million or $40 million in revenue.


“It’s fairness, and it’s money that we ought to be collecting in the state of Nebraska,” said Sen. John McCollister of Omaha.

Critics including Ricketts say Congress, not individual states, should pass laws on online sales tax. Federal legislation allowing states to collect sales tax from online retailers without brick-and-mortar presences has stalled for years because of a 1992 Supreme Court ruling that said states can only tax businesses with a physical presence in their boundaries.

In December, the 10th Circuit Court of Appeals let stand a Colorado law that pressures online retailers to collect sales taxes by creating onerous reporting requirements for those who refuse. The 8th Circuit, which includes Nebraska, is expected to rule in the next year on a South Dakota law requiring online retailers to collect sales tax.

Sen. Mike Hilgers of Lincoln urged senators to let federal courts rule before they pass any laws. Watermeier said it’s possible the 8th Circuit will have ruled by the time senators return in January.

“We’ll have guidance from the 8th Circuit in the next year or so, and we can act on that guidance,” Hilgers said.

Nebraska should pass an online sales tax law to pressure the Supreme Court to review its 1992 decision and help small business owners who lose sales to online retailers, said Sen. Mike Groene of North Platte.

“They’re getting beat up by the internet,” Groene said. “They do the sales work. They do the demos. They let the customer touch and feel the product, and then the customer disappears and buys it on the internet.”

Businesses including Omaha-based Gordmans have faced bankruptcy because of competition from online retailers, said Sen. Carol Blood of Bellevue.

“This is progressive,” she said. “This is keeping up with technology, and quite frankly, it breaks my heart every time I see one of my favorite businesses go under because of this competition.”


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