Legislation that would allow states and local governments to collect sales and use taxes from remote sellers has been introduced in both the House and Senate and appears to be picking up bipartisan support.

A 1992 United States Supreme Court decision maintained that merchants must have a physical presence in a state in order to be required to collect sales and use taxes on remote sales – such as telephone, catalog, and online purchases. While many states require customers to compute and pay these taxes on their own, they seldom do. Recent studies have indicated that as much as $23 billion annually in sales and use taxes on remote sales have gone uncollected.

In its role of jurisdiction over interstate commerce, Congress has the power to require merchants to collect sales and use taxes on remote sales. Senator Richard Durbin (D-IL) and Rep. John Conyers (D-MI) have introduced bills (S 1452, HR 2701) to do just that, and Reps. Steve Womack (R-AR) and Jackie Speier (D-CA) have also sponsored a measure (HR 3179). Senator Mike Enzi (R-WY) is also working on similar legislation. In addition, a group of “brick and mortar” retailers recently sent a letter to the Joint Select Committee on Deficit Reduction, or “Super Committee” asking that they include such authority in their proposal to Congress.

Most of the legislative efforts rely on the work of the Streamlined Sales and Use Tax Agreement, which is an effort by state tax administrators to simplify state and local tax structures in order to reduce the burdens of tax compliance by merchants. There are currently 24 states that have enacted legislation conforming to that agreement.

Get In Touch

1212 New York., Ave., NW, Suite 250
Washington, DC 20005
Phone: 202.842.4930