Delahunt Seeks to Help States Collect Sales Tax on Internet Sales

WASHINGTON July 8, 2010- With the rise of internet sales many have thought of instituting a mechanism for collecting sales taxes for purchases made on the internet. Massachusetts Representative Bill Delahunt (D)  has introduced a bill entitled the “Main Street Fairness Act” which would create a new mechanism for states to collect sales tax.

In 1992, the Supreme Court ruled through Quill v North Dakota; that a state may not collect taxes on an entity which has no physical presence in the state. This case was based on mail order goods but has been applied to all retailers including internet sales.

The Main Street Fairness act would empower the National Governors Association to establish the Streamlined Sales Tax Project which would align state sales tax policies.

Each state and city would still be allowed to establish its own tax rate but the categories for which items would be taxed would be simplified.

“The Main Street Fairness Act provides Congressional authority for this interstate compact to take effect.  This does not compel any state to join, but those that choose to adopt this system would then have the authority to require online retailers to collect and remit sales taxes the same way that businesses on local Main Streets do now.”

The bill has support from 70 different groups including the International Council of Shopping Centers, Kohls, National Governor’s Association, National Conference of State Legislatures, and the National League of Cities.