LITTLE ROCK— A proposal to force online retailers to collect Arkansas sales taxes failed for the third time before a House committee Tuesday, prompting a lawmaker sponsoring the measure to declare it dead for the session.
The House Revenue and Taxation Committee voted 9-6 for the measure, two votes shy of the 11 needed to send the Senate-backed bill to the full House. Republican Rep. Dan Douglas afterward told reporters he doesn't plan to present the measure again before the Legislature wraps up its session next week.
"It's really disgusting to me that the members of the General Assembly do not care about fairness in our taxes in the state of Arkansas," Douglas told reporters after the vote. "We have submitted every one of our in-state, brick-and-mortar retailers to an unfair disadvantage by allowing these online retailers not to collect and remit sales tax."
The bill requires companies without a physical presence in Arkansas to collect and remit state sales taxes if their gross revenue is more than $100,000 or they have at least 200 transactions. If they don't collect and remit taxes, the companies would be required to send information about purchases made by Arkansas residents to the state.
Amazon began collecting Arkansas sales taxes this month after the bill advanced in the Legislature, but Douglas and other supporters say the move is needed to force other online companies to collect. A spokeswoman for the e-commerce giant declined to comment.
To avoid collecting taxes, Amazon had relied on a 1992 U.S. Supreme Court ruling that bans states from forcing out-of-state retailers to collect taxes if they don't have a physical presence in the state. But the company has shifted recently. Amazon currently collects sales taxes in 41 states and the District of Columbia, according to the company's website.
The Arkansas bill, modeled after a 2016 law in South Dakota, is aimed partly at getting the high court to reconsider that 1992 decision. The U.S. Supreme Court last year rejected a challenge to a Colorado law requiring online sellers to notify customers about how much they owe in taxes.
Several Democrats on the panel opposed the measure after an effort to direct the expected tax revenue to needs such as pre-kindergarten and programs for the developmentally disabled was rejected. The committee is evenly split between Democrats and Republicans.
"So if we're going to go back to our people and try to explain why this is not a tax increase, why they should have been paying it all along, we've got to be able to go back and say, 'here's what you're paying for,'" House Minority Leader Michael John Gray said after the vote.
The measure also faces opposition from conservative groups who call the move unconstitutional.
The chairmen of the House and Senate tax committees there's a possibility the bill could have another chance, but acknowledged its future looked grim.
"I hate to say we've completely pulled the plug, but it's right there," said Republican Sen. Jake Files, the bill's Senate sponsor.