Plan would be fed/perm do both for states CP

A VAT would require the IRS, or a new agency, to establish an administrative apparatus, with its own forms, instructions, regulatory guidance, processing, taxpayer service, and collection and enforcement activities. Although much of this structure might be similar to what currently exists in the IRS, there would still be a new set of procedures and a new administrative structure whether or not the IRS administered the VAT. This would require a significant appropriation in advance of the VAT’s startup to establish the apparatus and pay for initial taxpayer education programs, and annual appropriations thereafter.

Parallel to the federal government’s administrative apparatus, businesses and other entities would have to establish the internal procedures they would need to learn about and comply with the VAT. Small businesses are assumed to be exempt from the VAT, but they would still have some compliance costs to learn about the VAT and determine whether exemption was in their best interests. Large businesses would be directly involved in collecting and remitting VAT. Nonprofit and government entities large enough to exceed the small business exemption level would be subject to VAT, entailing compliance costs similar to those of businesses subject to VAT.35

A national VAT would provide a template to help improve state and local retail sales taxes by extending their bases to broadly apply to services purchased by households, removing the cascading of tax that occurs from taxing sales between businesses, and resolving the taxation of internet and other remote sellers. These improvements would most easily be achieved if state and local sales taxes piggybacked on the national VAT, as occurred to some extent in Canada. Combining administration of a national VAT and piggybacked state and local sales taxes would reduce compliance costs for businesses and total administrative costs for governments.