Following more than a year’s worth of work conducted by members of AML, the remote seller sales tax commission was formed last November. The culmination of research to determine how to efficiently collect sales tax from remote sellers delivering goods within municipal boundaries as a result of the Wayfair Vs. South Dakota Supreme Court decision finally landed in the agenda of the council on Tuesday. The finalized tax code would add a supplemental section to Palmer’s existing tax code, and the city has 120 days from the Jan. 6 introduction of the remote seller sales tax code to adopt the ordinance or be removed from the commission. The parts of code that would be added are strikingly similar to Palmer’s existing code and Wallace said that the intent was to level the playing field for brick-and-mortar businesses competing with remote sellers.
“This isn’t going to be a big boom in my mind. It’s going to be good money, we’re going to see six figures in this but it’s not a multi million dollar prospect for the city and I would venture to guess that I don’t think it’s going to be in the hundreds of millions, much less 50 million for the state just because of how many people don’t live in taxing jurisdictions,” said Wallace.
The cost of collecting and remitting the online sales taxes would come at an 18 percent administration fee, which Wallace said was ‘not pretty.’ Wallace estimated that about $437,000 in online sales tax revenue could be collected annually in Palmer and asked the council if they wanted to remove the $1,000 sales tax cap that currently exists to continue to keep the playing field level for local and online retailers.
“That kind of leads me into the software that’s behind all this,” Wallace said. “We got a demonstration of it. It’s pretty slick, if that’s an official term. It’s so slick that we’re going to try and pursue having that for our own brick and mortar reporting.”
The council has until May to adopt the sales tax code or be removed from the commission.