“Fair Is Fair”: A legal perspective on the Marketplace Acts

The latest issue of Shopping Center Legal Update, a “legal journal for the shopping center industry,” has an interesting article on the Marketplace Fairness Act, Marketplace Equity Act, and Main Street Fairness Act—the three bills currently before Congress that would each allow states to require online retailers to collect sales tax.

In the article, Brian D. Huben, a partner at the LA law firm Katten Muchin Rosenman LLP, provides a legal perspective on online sales tax collection. We were particularly interested in his analysis of the Supreme Court case Quill Corp. v. North Dakota (1992). That case is responsible for the current rules about sales tax that govern online shopping, and this is the first place we’ve seen its details explained by a legal expert.

We found this part of the article, which quotes the dissenting opinion in Quill, particularly enlightening:

Some say that the past is prologue. Justice Byron Raymond “Whizzer” White, who dissented in Quill, presciently noted that “an out-of-state seller in a neighboring State could be the dominant business in the putative taxing State, creating the greatest infrastructure burdens and undercutting the State’s home companies by its comparative price advantage in selling products free of use taxes, and yet not have to collect such taxes if it lacks a physical presence in the taxing State.” Quill Corp., 504 U.S. at 328 – 329. While the stakes in Quill were decidedly smaller, the $23 billion in uncollected sales and use tax revenue cannot be ignored.

While fairly brief, this article is a great source for those interested in today’s online sales tax rules, how they came to be, and why some are arguing for change.

One Response to “Fair Is Fair”: A legal perspective on the Marketplace Acts

  1. Ken Miller says:

    If y’all don’t mind, I’d just as soon keep my own money rather than have to cough it up to some goofy legislature that can’t keep it’s hands out of it’s own people’s pockets and now wants to get it’s grubby paws into mine. If the state sales tax is too high to be competitive, then the legislature should cut the tax so that their merchants can compete.
    Interestingly, what’s been left out of the discussion is that there are shipping costs to be paid if goods are sent from one state to another, and they could easily be greater than the sales tax involved. Maybe the purchaser is more discerning in their selection of quality of the goods.
    Ken Miller

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