DALLAS, TX: The Marketplace Fairness Act is an attempt to do an end-run around the Supreme Court’s physical presence rulings and would place unfair compliance burdens on small businesses around the country, said Bartlett Cleland, Policy Counsel with the Institute for Policy Innovation (IPI), an independent nonprofit public policy organization.
"Further, instead of reinforcing the Supreme Court’s requirement that states simplify their tax regimes, the Act simply deems the states as having already done so, which is a further failure," said Cleland.
“For decades the Supreme Court has made clear that to require a tax from any entity, that the entity must have a ‘presence’ in the state, usually a store or shipping center or even a team of salespeople,” he said. “So ordering from a catalogue, when the merchant had no physical presence in the state, has never triggered an obligation to collect taxes (though the taxes have always been due and payable by the purchaser). And today e-commerce logically comes under that same rule.”
“States are already free to simplify their tax systems without any action by the federal government, and they were directed by the Supreme Court nearly 50 years ago to do so if they wanted such authority,” said Cleland. “Having failed to do so, they are now turning to Congress to bypass both the simplification and physical presence requirements.”
But Supreme Court rulings requiring physical presence are not “loopholes”—they are firm (and re-affirmed) constitutional law, he said.
“Even worse, in the Senate a much less transparent plan is afoot as pro-taxers, such as Senators Durbin (D-IL) and Enzi (R- WY), are trying to avoid a debate on the merits by adding the legislation as an amendment to the Small Business Jobs and Tax Relief Act, attaching a tax increase to legislation claiming to reduce taxes.”
“The states should set their own houses in order and comply with Supreme Court rulings before saddling small web-based businesses with tax compliance burdens likely to crush them,” said Cleland.
The Institute for Policy Innovation is an independent, nonprofit public policy organization based in Dallas, Texas. IPI Policy Counsel Bartlett Cleland is available for interview by contacting Erin Humiston at (972) 874-5139, or erin@ipi.org.
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