Bill > HB1005

This bill eliminates the vendor fee that retailers currently receive for collecting and remitting state sales tax, which has been a longstanding practice to reimburse businesses for the administrative work of tax collection. Currently, retailers can retain a percentage of the sales tax they collect (4% as of 2020, with a maximum of $1,000 per filing period), but the bill will phase out this fee entirely by January 1, 2026. The bill's primary justification is to promote fairness and equality among retailers, as not all businesses have historically been eligible for the same vendor fee, and to simplify the sales tax collection process. The legislative declaration emphasizes that this change is not a tax policy change because it does not alter the actual sales tax rate, and any revenue gain from eliminating the vendor fee is considered minimal. The bill also includes technical amendments to related statutes and appropriates $156,219 to the Department of Revenue for implementing these changes, including funding for additional personnel and system updates. Importantly, the bill argues that removing the vendor fee does not create new burdens for retailers and is intended to make sales tax collection more uniform across the state.