Committee hears proposal to require software remittance for certain delinquent sales‑tax filers

The House Smart Finance Committee on a scheduled voting day heard testimony on House Bill 2300, which would authorize the Department of Revenue to require certain delinquent sales‑tax filers to use a third‑party sales‑tax service provider to remit and file sales tax.

Deputy Secretary Lisonbee Morgan and Mark Morabito, the Department official who described the pilot, told the committee the proposal targets taxpayers with a secured delinquency of at least $5,000 or those with three consecutive nonfiled periods. Under the bill the taxpayer would be required to use a prequalified sales‑tax service for the later of 12 months or six months after the delinquency is cured; the Commonwealth would pay the vendor fee for the first 12 months, then the taxpayer would assume the cost.

"We started with 29 taxpayers in that group, and we ended with 23," Morabito said, describing the pilot’s results. "Seventeen of the 23 taxpayers at the end of the program opted to continue to use the service at their cost." He described software that integrates with point‑of‑sale systems, holds funds in trust and remits tax daily when returns are filed.

Morabito estimated that when fully operational the program could affect about 3,000 taxpayers and cost the state roughly $2,000,000 for the initial year of vendor payments. He provided an illustrative revenue context: if those taxpayers average $5,000 per month in sales tax, that would equal about $180,000,000 a year of secured tax and make the program cost about 1.1% of the secured revenue.

Members pressed on practical and cultural impacts. Representative Fritz asked whether other states require this program; Morabito said, "to the best of my knowledge, there are no other states that have this type of requirement," though many taxpayers already use third‑party providers voluntarily. Chair Griner and others asked how the approach would work for businesses or communities that limit technology use; Morabito said the bill uses a permissive ‘‘may require’’ standard and the Department would provide certain exceptions (for example, in a natural disaster) and implementation support.

Members also raised questions about error correction and refunds when software‑driven remittance results in an incorrect charge; Morabito deferred that procedural question to the Board of Appeals chair for claims and refund mechanics.

Representative Cepeda Freitas, the prime sponsor, said the software can ease burdens on small businesses. "I discovered this software on my own in 2019, and it was costing me about $50 a month. It was, like, the best thing ever," Cepeda Freitas said, describing how automatic remittance helped avoid late interest and penalties.

Committee members asked how vendors would be selected; Morabito said the Department would run an RFP or RFQ and anticipate prequalifying a list of vendors so taxpayers could choose from multiple options. No vote on HB 2300 was taken; members were invited to follow up with the chair, the bill sponsor or the Department as the committee continues to examine the proposal.