New Use Tax Proposal Bad for Marketers, DMA Says in Protest

As Isaacson’s letter notes, by abandoning the current mandatory “destination-based” standard, the proposal instead would permit member states of the Streamlined Sales Tax Project to adopt a two-tiered-optional-rate sourcing protocol.

The new optional rate only would apply to the local portion of combined state and local use taxes, and would require a member state to apply “origin sourcing” to all intrastate sales. It also would require “adoption of a combination rate for interstate sales,” according to a DMA statement, “which could be as much as the sum of the state rate plus the highest local rate applicable within the state, irrespective of the actual tax rate in effect where the purchaser is located.”