Expanding sales tax collection to remote retailers

by Emily Dietrich The debate over sales tax collection for remote retailers and traditional sellers continues to rage. As the Institute reported last month, the state law that forces remote sellers to remit taxes to the Illinois Department of Revenue on behalf of Illinois residents has cost many families in Illinois both jobs and income. Now, federal...

by Emily Dietrich

The debate over sales tax collection for remote retailers and traditional sellers continues to rage. As the Institute reported last month, the state law that forces remote sellers to remit taxes to the Illinois Department of Revenue on behalf of Illinois residents has cost many families in Illinois both jobs and income. Now, federal legislation is turning up the heat on the issue of sales tax collection.

On Tuesday, The Wall Street Journal asked both sides of the debate to weigh in on the question: should states require online retailers to collect sales tax? In 1992, the Supreme Court ruled that remote sellers do not have to collect sales tax in states where they do not have a physical presence. The Court determined that this would place an undue burden on interstate commerce.

Proponents of federal legislation want Congress to overturn the Court ruling and mandate a system where remote sellers would have to collect sales tax on all purchases. Michael Mazerov of the Center on Budget and Policy Priorities says it’s only fair. He argues that local stores lose sales to online retailers when these retailers don’t collect sales tax.

Steve DelBianco of NetChoice disagrees. He says, “fairness is when everyone plays by the same rules. And today, all online and offline retailers play by the same rule: They collect sales tax for every state where they choose to establish a physical presence.” He continues, “For decades, Main Street retailers have been getting clobbered by national chains. To survive, small retailers added online stores to expand their markets.”

WSJ has opened a public opinion poll asking if businesses should be required to collect sales tax in states where they don’t have a physical presence. Respondents polled in favor of retaining current law at 46.2 percent. They said that sales tax should be collected only when a business is located in the state. Those who want to expand sales tax collection have garnered 39.4 percent of the vote.

The online poll is still open. Take a moment and voice your opinion here.