The Remote Transactions Parity Act (RTPA) poses a major threat to sellers of e-cigarette and vapor products across the country. The legislation, sponsored by Rep. Jason Chaffetz (Utah-03), changes the way online products are taxed in a way that is ultimately a form of higher taxation without representation.

Currently, online sales are taxed using origin-based sourcing. This means that the seller collects sales taxes for the state where they are physically based. This “physical presence” standard ensures that businesses or individuals will only be beholden to the tax code where they set up shop.

If passed, RTPA would shift the tax collection framework for online sales to destination-based sourcing, effectively circumventing taxpayer protections upheld by a “physical presence” standard. Further, if sellers had a dispute about the taxes demanded by another state, the seller would then be subjected to the destination state’s court system.

Not only does RTPA take away taxpayers’ and businesses’ rights, it would allow states to export their tax codes in a way that gives them excessive power to control interstate commerce.  

This should be particularly concerning to e-cigarette and vapor products retailers that are already under attack in many states. In states like Kansas, Louisiana, North Carolina and Minnesota, where there is already legislation that imposes sin taxes on e-cigarettes, anti-vaping advocates will use this federal legislation as yet another weapon in their arsenal to thwart the growth of e-cigarette sales.

The infographic linked here illustrates the proposed legislation. Americans for Tax Reform encourages all members of the vaping community to contact your Senators and Representatives and tell them that you want nothing to do with this tax power grab.

Photo Credit: http://vaping360.com/, https://www.flickr.com/photos/127173209@N05/