Congress has once again introduced federal legislation, which if passed, could require out-of-state retailers to charge and collect sales tax on sales to customers in certain states .
That right, on July 29, 2011, Congressional Democrats in both the U.S. Senate and House of Representatives introduced “internet sales tax” legislation. In the Senate, S. 1452 was introduced by Senator Richard Durbin (Illinois). A companion bill, H.R. 2701 was introduced in the House by Representative John Conyers (Michigan). Both bills are referred to by the same title, the “Main Street Fairness Act”.
By now you’ve certainly heard about the latest Federal “Main Street Fairness” legislation, as reporters, commentators, industry groups, on-line retailers, bloggers, and just about everyone else has an opinion on it. This isn’t surprising as a major focus of the Main Street Fairness Act is the hotly debated issue of internet sales taxes. But this isn’t a new debate! The issue of whether sales made over the internet should be subject to a sales tax collection requirement has been widely discussed for at least a decade now, and this isn’t the first time similar legislation has been introduced. Just over a year ago – on July 1, 2010 – similar legislation was introduced by former House Representative, William Delahunt (H.R. 5660 – also titled the “Main Street Fairness Act”).
Proponents of internet sales tax legislation include brick-and-mortar retailers whose “physical presence” in their state requires them to charge sales tax, and who argue, therefore, that this puts them at a disadvantage against certain on-line retailers who are able to sell the same merchandise to the same customers “tax-free”. (But these sales aren’t “tax-free” at all, as customers may still owe a use tax.) Also in support are the state and local governments who lose billions in state revenue dollars each year to uncollected use taxes. On the other side, on-line retailers have argued for years, that a 1992 U.S. Supreme Court decision, Quill Corp. v. North Dakota, does not require them to charge tax on sales to customers in states in which they lack a physical presence. On-line retailers and other opponents have also maintained that imposing a sales tax collection responsibility creates a disproportionate administrative burden, especially on small on-line retailers who would need to navigate a complex system of tax rates in order to properly collect sales tax from customers located in thousands of different jurisdictions.
I covered this latest federal-state development, in not one but two separate blog posts. While both posts are similar in that they both provide an overview of the newest “Main Street Fairness” legislation, the two posts are also different. So instead of re-producing one or the other post (or both) as a “State and Local Tax ‘Buzz’ ” post, I invite you to read my two "Main Street Fairness" blog posts at the SalesTaxSupport.com and the AllBusiness.com sites, where these two posts were originally published. Here are direct links to these two posts:
- “Main Street Fairness Act. Is SST the Silver Bullet?”, SalesTaxSupport.com, August 10, 2011
- “Can the Main Street Fairness Act Stop the Sales-Tax Madness?”, AllBusiness.com, August 22, 2011