Excise and Sales Tax Bureaus question

Marilyn,

Sec. 202 of HR25 creates a Sales Tax Bureau in the Dept. of the Treasury. The purpose of the bureau is coordination of the state administration of the federal sales tax. As you know, the states have all of the expertise in administering sales taxes, so the FairTax takes advantage of this by having the states collected the federal sales tax along with their state sales taxes. The states can do it much more efficiently using existing systems.

The IRS is eliminated and funding prohibited, but there will still need to be a small Bureau (maybe 10% of the size of the IRS. The purpose of this bureau is to administer the national sales tax in those states that are not sales tax administering states. Five states do not have sales taxes. They can contract with other states to have them administer the FairTax for them, for example Oregon could contract with Washington or California to administer the FairTax for them. If they choose to do that, then the Sales Tax Bureau in the Dept of the Treasury would be responsible for overseeing the contract under which CA or WA collected the FairTax on sales within OR. The Sales Tax Bureau will also oversee issue related to inter-state transactions, and the contracts with the state sales tax authorities collecting the FairTax on consumption occurring within their borders.

The Sales Tax Bureau is also required to have one conference each year for the purposes of conferring with state sales tax administrators to evaluate the state of the national sales tax system.

The Sales Tax Bureau will not be reviewing tax returns or enacting with individuals in any way. It is a small bit of "bureaucracy" necessary to the successfull transfer of the collection and enforcement of the federal tax to the state level. Nor will it be a depository for tax information on individuals or businesses. It exists solely to monitor and enforce the tax collection agreements between each state and the federal government.

Karen Walby, Ph.D.
Tax Economist