July 29, 2011
NCSL Announces Support for Main Street Fairness Act
The National Conference of State Legislatures (NCSL) announces its support for the Main Street Fairness Act, introduced today in both houses of Congress by Senator Dick Durbin of Illinois and Congressmen John Conyers of Michigan and Peter Welch of Vermont, and encourages federal lawmakers to support this important legislation.
At a time when states continue facing severe budget gaps—collectively $72.0 billion leading into the FY 2012 budget process according to NCSL—it is essential states be allowed to collect the revenue generated by sales taxes. In 2012, states will lose an estimated $23.3 billion, collectively, in uncollected sales taxes from out-of-state sales, with more than $11.3 billion alone from electronic commerce transactions, according to a study by the University of Tennessee.
“It is simply not good public policy to be unable to collect sales taxes from this significant, existing revenue source. States urgently need these dollars to support basic services such as education and public safety,” said Senator Steve Morris, NCSL president-elect. "Congress can enhance state sovereignty and provide fiscal relief to the states without a penny coming from the federal government.”
“We’re not talking about adding a new tax on Internet commerce; we’re correcting a tax avoidance problem," said Senator Richard Moore, NCSL president. "Allowing some remote sellers to avoid this tax is unfair to the main street merchants that make up the lifeblood of our local communities.”
Beginning in 1999, NCSL, along with the National Governors Association (NGA), led the way for states to simplify and modernize the states’ sales and use tax collection systems with the Streamlined Sales and Use Tax Agreement. Twenty-four states already are part of the agreement, but federal legislation is needed for all out-of-state sales taxes to be collected.
If passed, the Main Street Fairness Act will remove the burdens to interstate commerce that were of concern to the Supreme Court in the 1967 Bellas Hess case, and the 1992 Quill v. North Dakota case. Through these cases, the Supreme Court acknowledged consumers owe the sales tax when they purchase goods through catalogs or over the Internet, but ruled that states cannot force retailers to collect the tax. This legislation will overturn these decisions and authorize states to collect sales taxes on out-of-state sales.
The legislation is a win for local businesses throughout the country by leveling the playing field between local businesses who have to collect sales taxes, and out-of-state merchants who currently do not. The legislation also removes the liability for businesses collecting sales taxes, ensuring that sellers are held harmless for calculations and collections using the certified technology provided by the Streamlined Sales and Use Tax Agreement.
NCSL is a bipartisan organization that serves the legislators and staffs of the states, commonwealths and territories. It provides research, technical assistance and opportunities for policymakers to exchange ideas on the most pressing state issues and is an effective and respected advocate for the interests of the states in the American federal system.