LITTLE ROCK — For the third time, a House committee on Tuesday rejected a bill aimed at collecting sales taxes on Internet purchases in Arkansas, prompting the legislator who has been carrying the measure in the House to declare it dead.
Senate Bill 140 by Sen. Jake Files, R-Fort Smith, received nine votes in support and six against in the House Revenue and Taxation Committee, falling short of the 11 votes needed to advance out of the committee.
Files’ bill, as originally filed, would require an out-of-state seller with no physical presence in Arkansas that sells more than $100,000 worth of products or makes at least 200 transactions in Arkansas in a calendar year to begin collecting sales taxes on purchases in the state.
The bill cleared the Senate in that form, but it later was amended in the House tax committee to allow a seller either to collect the tax or to report purchases to the state for tax collection purposes and notify customers in Arkansas that they are required to pay a tax to the state on those purchases under a previously existing — though little followed — state law.
Amazon said earlier this year it would voluntarily begin collecting sales taxes on purchases in Arkansas, but other online retailers have not made similar announcements.
In a virtual replay of two previous meetings, the House tax panel on Tuesday rejected an amendment offered by Democrats, and the bill itself went on to defeat when Democrats largely declined to support it. Democrats control half of the committee’s 20 seats.
House Minority Leader Michael John Gray, D-Augusta, proposed an amendment to require that $250,000 of the net available general revenue obtained annually by the state under the measure be distributed between rural police and fire departments, home- and community-based services for the developmentally disabled, early childhood education and after-school programs.
The amendment failed in a 9-7 vote. After two brief recesses during which some of the committee members huddled together for last-minute private discussions, the bill itself failed.
Rep. Dan Douglas, R-Bentonville, who carried the bill in the House, told reporters the bill is dead for this session. He also said a separate bill he filed that aims to collect sales taxes on Internet purchases appears to be dead in the Senate.
“It’s disgusting to me that the members of the General Assembly do not care about fairness in our taxes in the state of Arkansas,” he said. ‘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.”
Gray told reporters that although Arkansas has a law on the books requiring people to self-report their purchases from out-of-state sellers and pay taxes on them, SB 140 is widely seen by the public as a proposal to raise taxes.
“If we’re going to go back to people and try to explain to them 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, ‘And here’s what you’re paying for,’” he said.