By SEMA Washington, D.C. Staff
Following years of debate, legislation to give states the ability to collect sales tax from out-of-state Internet and mail-order retailers passed the U.S. Senate. President Obama has signaled his support of the “Marketplace Fairness Act” (S. 743). However, the bill must still be approved by the U.S. House of Representatives. Given that SEMA represents both Internet retailers and brick-and-mortar stores, SEMA is neutral on the legislation.
Under a 1992 U.S. Supreme Court decision, states cannot force retailers to collect state sales/use taxes unless the company has a physical presence in the state (“nexus”). The legislation would provide states with this authority. It would also exempt sellers that make less than $1 million in total remote sales in the year preceding the sale from the requirement to collect the tax.
The bill is constructed around acceptance of the Streamlined Sales Tax Project (SSTP)—a multi-state agreement to establish one uniform system to administer and collect sales taxes. Twenty-four states have adopted the simplification measures to date, thereby making them eligible to require sales tax collection if Congress enacts the legislation into law. Those states are: Arkansas, Georgia, Indiana, Iowa, Kansas, Kentucky, Michigan, Minnesota, Nebraska, Nevada, New Jersey, North Carolina, North Dakota, Ohio, Oklahoma, Rhode Island, South Dakota, Tennessee, Utah, Vermont, Washington, West Virginia, Wisconsin and Wyoming.