Letter to Okla. Legislators & Gov. RE: Affiliates Tax
A letter was sent to every representative and senator yesterday, including one to Gov Fallin, opposing two internet tax bills, HB 2586 & SB 1561, which should be vehemently opposed.
These bills are both an affiliate and subsidiary tax bills, meaning that a company not physically located in Oklahoma but with affiliates in Oklahoma referring business to that company or owning (more than 80%) of a subsidiary corporation in Oklahoma would be required to collect and remit Oklahoma sales taxes. These taxes are already owned by the consumer in the form of use taxes.
This bill would also shift the burden of collection from the Oklahoma Tax Commission to the out-of-state (but affiliated/subsidiary) corporation. The Supreme Court has already ruled that these types of laws violate the Commerce Clause of the Constitution in Quill Corporation v. North Dakota.
We are regarding these types of bills as a tax increase requiring a revenue offset. If the legislature proceeds with passing this tax, estimated increases in revenue should be followed by a reduction in the sales tax rate (broader base but lower rate) or lower rates elsewhere. **Otherwise, this will confirm what some on the left are already saying about our income tax reduction plan that this is how Oklahoma plans on making up the difference.