Wyoming Senator reintroduces bill to create sales taxes for online sellers
The United States Congress is currently exploring tax legislation for online sales, which according to National Retail Federation Senior Vice President for Government Affairs David French, has “stalled for far too long.”
US Senator of Wyoming Michael Enzi on Thursday reintroduced the Marketplace Fairness Act that would enable state governments to collect and use taxes from online retailers that do not have a physical presence. The legislation passed the Senate in 2013 but it never received a vote in the house.
South Dakota Representative Kristi Noem also reintroduced a House version of the Remote Transactions Parity Act that complements the Marketplace Fairness Act. Both measures would overturn a 1992 US Supreme Court ruling that out-of-state sellers can be required to collect taxes only if they have a physical presence such as a store, warehouse or office.
The ruling for Quill Corp. v. North Dakota in 1992 relied on a 1967 case, in which the court said a state could not require an out-of-state mail order seller to collect sales tax unless the seller had a physical presence. The ruling did not take into account a 1977 case that, according to Justice Anthony Kennedy and the NRF, established a “more recent and refined test” of whether tax should be collected.
Justice Kennedy said, “Given … changes in technology and consumer sophistication, it is unwise to delay any longer a reconsideration of the court’s holding. The legal system should find an appropriate case for this court to reexamine Quill.”
His comments came after a unanimous ruling in Direct Marketing Association v. Brohl, Executive Director, Colorado Department of Revenue that said federal courts should be allowed to hear a Direct Marketing Association lawsuit against a 2010 Colorado sales tax law. The law does not require out-of-state retailers to collect sales tax from Colorado customers, but requires untaxed purchases to be reported to state tax authorities.
“The Internet has caused far-reaching systemic and structural changes in the economy,” Kennedy said in 2015. “Although online businesses may not have a physical presence in some states, the web has, in many ways, brought the average American closer to most major retailers. A connection to a shopper’s favorite store is a click away regardless of how close or far the nearest storefront.”
Several bills were introduced over 15 years that could have overturned the Supreme Court ruling, and in November 2016, 11 states asked the court to reconsider the 1992 ruling. According to the NRF, states and local governments lose close to $25 billion a year because of untaxed online sales.
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