National Retail Federation Urges Congress to Allow States to Tax Out of State Retailers

Posted on April 26, 2012

The National Retail Federation is determined that Congress write legislation that overturns the Supreme Court decision that says that customers don't have to pay sales tax when the order from an out of state retailer that has no nexus to the state where the customer lives.

"As retailing evolves and Internet sales become a more prominent portion of total retail sales, it is critical that Congress address the sales tax collection discrimination that exists between brick-and-mortar and remote retailers," NRF Senior Vice President for Government Relations David French said. "Brick-and-mortar retailers are major contributors to the health of local communities and should not be placed at a disadvantage compared to remote sellers that have no local presence."

French submitted these comments in a written statement to the Finance Committee which is holding hearings on the impact of federal tax reform. There are three bills pending in Congress that would give states the power to tax out of state sellers. Consumers are opposed to paying sales tax from out of state retailers. Books and mortar stores support the measure to tax out of state sales.

The 1992 Supreme Court case that outlaws states taxing retailers in other states is Quill v. North Dakota. It says that the states can collect sales tax on the out of state retailer if the retailer has a physical presence in the state, such as a store, warehouse or office. The court said otherwise it would impose an unfair burden on retailers who would have to comply with tax laws in 45 states and 7,600 local sales tax systems.

This issue has been in the news the past several years as various states have attempted to collect sales tax from Amazon.com, even when Amazon had no physical presence in the state.