HeinOnline is a subscription-based resource containing thousands of academic and legal journals from inception; complete coverage of government documents such as U.S. Statutes at Large, U.S. Code, Federal Register, Code of Federal Regulations, U.S. Reports, and much more. Documents are image-based, fully searchable PDFs with the authority of print combined with the accessibility of a user-friendly and powerful database. For more information, request a quote or trial for your organization below.
![handle is hein.taxfoundation/taxfaagf0001 and id is 1 raw text is: Responses to
Questions from Representative Jason Chaffetz
on the Marketplace Equity Act of 2011
Joseph Henchman,
Vice President, Legal & State Projects, Tax Foundation
1. Online retailer Overstock. com has told me and many others in Congress that it will support federal
legislation to address the remote seller sales tax collection issue if the legislation addresses certain basic
principles. Those principles are: (a) States must provide certified plug-and-play software to remote sellers;
(b) Remote sellers have immunity from state and third party plaintiff liabilityfor errors in the software
and/or information provided by the seller; (c) States provide remote sellers fair compensation for the
installation, integration, operation and maintenance ofthe software in remote sellers'infrastructure and
the collection administration costs; (d) Thefre] be a single state audit in each state, including a single agent
contact to address remote seller tax collection issues; (e) States make meaningful simplification of sales tax
rules; (f) The legislation include clear language that the collection ofsales tax by a remote seller, does not,
of itself create nexus in that state for any other taxing or regulatory purpose; and (g) There befederal court
jurisdiction to determine ifstates are abiding by the law Congress passes.
The process of sales tax collection is presently complex and fragmented. Key contributors to this are
(1) a general determination by many jurisdictions to duplicate reporting, collecting, and auditing
functions; (2) poor guidance on line-drawing between taxable and non-taxable items in advisory
rulings; (3) states that permit jurisdictions to define their own tax base independently of the states;
(4) far too many overlapping sales tax jurisdictions, which actually grow in number each year; and
(5) states' eagerness to grant exclusions, exemptions, and preferential rates to special interests. The
entire system is ad hoc and the costs are imposed entirely on retailers that collect the tax.
States' ability to export this mess to out-of-state companies has been limited by the Commerce
Clause. To the extent Congress wishes to remove this constraint on state power to collect sales tax
from out-of-state companies, some meaningful limitation on state tax power should be substituted.
The best approach, in my opinion, is authorize states to collect tax on condition that they adopt
meaningful minimum simplifications of the kind I explained in my testimony and some of which
appear in the list you cite.
Above all, remember that each simplification not adopted is an additional cost that will be borne by
interstate commerce. Require a lot of simplifications, and the costs are greatly minimized and you
may not even need a minimum threshold. Require few simplifications and the costs are maximized,
and state threats to interstate commerce will be great.
1](ViewImageLocal?handle=hein.taxfoundation/taxfaagf0001&div=1&collection=&method=preview&ext=.png&size=3)