Sales Tax Fairness

Marketplace fairness would level the sales tax playing field by ensuring that sales taxes are applied equally – whether the sale occurs at a physical location or online. It would ensure that main street businesses are not unfairly burdened with a government-sanctioned price disadvantage compared to their online competitors. With the rapid growth in e-commerce, marketplace fairness only makes sense: US tax policy should reflect today’s marketplace.

The  Supreme Court held over 20 years ago in Quill Corp. v. North Dakota, 504 U.S. 298 (1992) that a state only could require a remote retailer to collect use tax from in-state customers to the extent that the retailer had a physical presence in the state. Because of the many different state sales and use tax laws, the Court reasoned that imposing such sales and use tax collection responsibility would unconstitutionally burden interstate commerce. However, the Court held that ultimately it was Congress’ to responsibility to determine the extent to which states could require remote sellers to collect sales and use tax on in-state purchases.

Since this decision, internet sales have increased exponentially and, according to recent estimates, over $26 billion in state sales taxes went uncollected in 2015. The pressure on state budgets, the technological advancement over the last two decades, and the growing bipartisan support for a legislative solution suggest that the time has come for Congress to provide marketplace fairness. 

NAREIT, along with numerous state and national businesses and organizations, supports Congressional efforts to enact a marketplace fairness solution in the 115th Congress to level the playing field between brick and mortar and remote retailers.

STATUS: As judicial challenges to state legislative efforts to treat all retailers equally are moving through the courts, it is possible that a judicial solution to this difficult problem may be reached in advance of a congressional solution. However, on April 27, 2017, Senators Lamar Alexander (R-TN), Mike Enzi (R-WY), Dick Durbin (D-IL), and Heidi Heitkamp (D-ND) re-introduced S. 976, The Marketplace Fairness Act (MFA), and Representatives Kristi Noem (R-SD-AL), Steve Womack (R-AR-3), Jason Chaffetz (R-UT-3), Steve Stivers (R-OH-15), Lou Barletta (R-PA-11), John Conyers (D-MI-13), Jackie Speier (D-CA-14), Peter Welch (D-VT-AL), Suzan DelBene (D-WA-1), and David Cicilline (D-RI-1) introduced H.R. 2193, The Remote Transactions Parity Act (RTPA). NAREIT strongly supports these proposals and will work with the co-sponsors towards its enactment.

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