House Bill 581

2016 Freedom Index Score (-2)

Analyst: Wayne Hoffman
Date: March 14, 2016
ANALYST NOTE: House Bill 581 would apply the state use tax to businesses that are
not necessarily located in Idaho but may have even a limited presence in the state,
including, among other things, the location of employees in the state or the
transmittal of messages via social media or text messages. The language is broad
enough that one could imagine it applying to most retail establishments, and the
result of is the implementation of a new internet sales tax in Idaho.
Point No. 3: Does it give government any new, additional, or expanded power to
prohibit, restrict, or regulate activities in the free market? Conversely, does it
eliminate or reduce government intervention in the market?
ANALYSIS: The bill creates vast new categories of businesses that might be
considered to have "sufficient contact with the state ... to require the seller to
collect and remit use tax on sales of tangible personal property or services" in
the state of Idaho. In analyzing whether a business meets the criteria for
collection of use taxes, the tax commission will have to analyze a retailer's
business interactions in ways never before contemplated, including social
media presence, text messages, marketing campaigns and the existence of
employees in the state. (-1)
Point No. 5: Does it directly or indirectly create or increase any taxes, fees, or other
assessments? Conversely, does it eliminate or reduce any taxes, fees, or other
assessments?
ANALYSIS: The bill's result would be the imposition of new taxes on retail
sales that are currently not exposed to the use tax. Proponents of the bill say
the measure is merely calling for the collection of taxes already owed, but the
bill leaves a lot to the imagination of the state tax commission, which will be
charged with examining the slightest interactions in Idaho's retail marketplace
for the purpose of determining whether a business should collect and remit
use taxes. (-1)