Federal Bill Would Provide Uniform Collection of Sales Taxes
Federal legislation has been filed that would give states the authority to compel most online and catalog retailers to collect sales taxes at the time of sale, regardless of the location of the retailer.
The stated goal of the legislation, known as the Marketplace Fairness Act of 2013, is to put remote retailers on the same footing as local retailers for purposes of sales tax collection. The Act would reverse a 1992 U.S. Supreme Court opinion holding that a business may not be required to collect and remit sales and use taxes to a state if it has not established a physical presence in that state.
If adopted, the Act would subject remote retailers to sales taxes if the state simplified its sales tax laws in order to provide uniformity of collection nationwide. One component of any statewide simplification language would be mandatory “destination” sourcing of all interstate sales. Destination sourcing means that the sales tax is collected at the location where the sold item is received by the purchaser. In other words, cities would receive local sales taxes on purchases made by its residents from remote retailers covered by the Act.
A press release from the National League of Cities on the Marketplace Fairness Act of 2013 is available at http://www.nlc.org/media-center/news-search/national-league-of-cities-supports-the-marketplace-fairness-act-%E2%80%93-urges-quick-adoption.