Main Street Fairness Act

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Updated July 1, 2010

The Main Street Fairness Act, which was introduced in the U.S. House of Representatives on July 1 (H.R. 5660), will provide states with a blueprint to create a simplified sales and use tax collection system. When implemented, the federal legislation will level the playing field for main street retailers and their online counterparts.

There is much at stake for states. Current estimates show that states will lose more than $23 billion in uncollected sales tax revenue because of remote or out-of-state sales.

This is not a new tax on Internet commerce. It merely provides states the mechanism to collect a tax on consumption already levied by the state but not collected. The 1967 Bellas Hess case and the 1992 Quill v. North Dakota case acknowledged that consumers owe the sales tax when they purchase goods through catalogues or over the Internet, but ruled that states cannot force retailers to collect the tax. The Main Street Fairness Act would change that.

NCSL is closely tracking the issue and the federal legislation. Check back for updates.