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1 Joseph Henchman, Marketplace Fairness Act: A Primer 1 (2014)

handle is hein.taxfoundation/taxfaaic0001 and id is 1 raw text is: The Marketplace Fairness Act FOUNDATION A Primer on the Quill Physical Presence Rule, the Streamlined Sales Tax Project, State Amazon Tax Laws, the Hybrid Origin-Sourcing Proposal, and Proposed Federal Legislation By Joseph Henchman * The Marketplace Fairness Act (MFA) would allow any state to require sales tax collection by out-of-state retailers, if the state simplifies its sales tax system. * Sales taxes are paid by consumers, but are usually collected and remitted by retailers at significant cost. * State taxation power is generally limited to individuals and businesses within the state's borders, to prevent harm to the national economy from tax exporting. * Some states are nonetheless passing click through nexus statutes and demanding out-of-state retailers collect sales tax, leading to extended litigation and uncertainty. Other states are working with the Streamlined Sales Tax Project for greater tax uniformity. * A federal solution is needed and must allow states to collect sales tax on sales to their residents, eliminate unjustifiable tax distinctions between identical items, define the limits of state tax authority, and simplify the tax system to reduce compliance burdens. * The MFA bill is in this vein but would benefit from software compatibility requirements, a blended tax rate option, limits to state audit authority, and federal jurisdiction over disputes. * Hybrid Origin-Sourcing (HOS), while appealing in its simplicity, would require fundamentally restructuring how sales taxes work, confusing consumers and posing immense administrative and legal obstacles. * Because HOS allows states to tax consumers without minimum contacts with the state, it likely would violate the U.S. Constitution's Due Process Clause.

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