While the Marketplace Fairness Act continues to garner support in Congress, it remains in committee for the time being—which means that this holiday season, at least, the online sales tax loophole will stay open.
Without action from Congress on the issue of online sales tax, states are beginning to return to passing their own legislation. Two states, Michigan and Florida, have recently introduced bills that would require online retailers to collect sales tax.
Unfortunately, there’s not much states can do on their own—the Supreme Court said in 1967 and 1992 that states can’t require out-of-state retailers to collect sales tax. At the same time, though, the court said that Congress could and should decide the issue legislatively. That’s what the Marketplace Fairness Act is about.
We hope that all those state legislators, governors, local retailers, and others who are supporting state legislation will make their voices heard in DC, too. This is one instance where state action just isn’t enough. Congress needs to give states the right to decide for themselves whether they’ll require online retailers to collect sales tax.