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)