#9. Remote Purchaser Reporting Mandate

What’s so iAWFUL? Requires out-of-state companies to report consumers’ purchasing information to the state’s Department of Revenue.

Hawaii’s Bill Relating to the General Excise Tax – HB 1183

California’s Amendment to the Sales and Use Tax – AB 155

Hawaii’s HB 1183 and California’s AB 155 create a tax reporting requirement for out-of-state companies selling to in-state citizens.

So what is so iAWFUL?

Under HB 1183 and AB 155, Hawaii’s and California’s tax departments will now have a listing of all purchases its citizens make from out-of-state companies.  These states want to enforce sales tax on purchases by way of the use tax that each of us owes to our government when sales tax isn’t collected.

But these laws go too far.  For example, HB 1183 forces out-of-state retailers to:

• track and report the purchases of Hawaiians;
• file an annual statement with purchase data for each purchaser to the Department of Revenue which includes the resident’s name, zip code, and amount spent;
• send buyers a summary statement of all their purchases so they know how much use tax to pay (like a 1099 form we receive on investments); and
• notify on every invoice and receipt to Hawaiian purchasers of their need to file a sales and use tax return with the state.

So that it can earn a few more bucks in sales tax, Hawaii’s and California’s Departments of Revenue will now know all the vendors where residents made online or catalog purchases from remote sellers. This would include sensitive items of a particular kind of merchandise — adult movies, medical products, items that reveal political views, etc.

A Colorado judge citing potential constitutional violations recently enjoined a 2010 Colorado reporting law.  Judge Blackburn found “the burdens imposed by the Act and the Regulations are inextricably related in kind and purpose to the burdens condemned [by the Supreme Court] in Quill.”

Previous NetChoice Writings on This Issue

• Privacy Trumps Taxes—Victory for Consumers in North Carolina…But What About Colorado’s Bad Law?
• Rocky Mountain Low:  Colorado’s New “Track and Tax” Law Invades Consumer Privacy
• On Tax Day, A Taxing Year Already for the Internet

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