Rep. Lance Clow, R-Twin Falls, is facing pointed questioning from members of the House Revenue & Taxation Committee this morning on HB 581, the bill to expand the definition of which retailers are engaged in doing business in Idaho – and thus must collect and remit sales taxes. The bill would expand the definition to include not just businesses with brick-and-mortar stores in Idaho, but also those businesses that have distribution facilities, marketing, advertising, fulfillment and other operations in the state. Clow told the House panel that 31 states have or are considering similar legislation.   

Rep. Stephen Hartgen, R-Twin Falls, asked Clow if his bill would tax newspaper advertising, which is currently exempt; Clow said no. The wording in the bill about marketing and so forth is just part of the definition of who’s engaged in business, he said. Hartgen also questioned whether the bill’s legislative intent was attempting to nullify the U.S. Supreme Court’s Quill decision about nexus; Clow said it wasn’t, and the court has indicated that decision is outdated and could be reconsidered in a future cases.

Currently in Idaho, people who make online purchases are supposed to pay the 6 percent tax by reporting and remitting it on their annual income tax returns. “This is tax that’s already due,” Clow said. If the seller collects and remits the tax, the taxpayer wouldn’t have to do that.

Reps. Ron Nate R-Rexburg, and Heather Scott, R-Blanchard, asked Clow if the bill wouldn’t create confusion, as taxpayers didn’t know whether they’d paid the tax or not and double-paid it. Clow said, “You’ll know if you paid the tax or not. If you didn’t pay the tax through a retailer, then you have to pay it yourself.”