Enterprise Update: Congress Should Not Authorize States to Expand Collection of Taxes on Internet and Mail Order Sales

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Enterprise Update Eliminating barriers to enterprise and innovation Heritage Employment Report: March Report Mixed, on Balance Disappointing Obama Economy Leaves Little Changed Empower Workers, Not Unions with Political Agendas Tales of the Red Tape Series Congress Should Not Authorize States to Expand Collection of Taxes on Internet and Mail Order Sales By David Addington Abstract: The U.S. Supreme Court’s landmark 1992 decision in Quill Corporation v. North Dakota protects out-of-state businesses in the Internet era from overreaching by revenue-hungry states. The Court’s decision prevents a state from forcing an out-of-state business to serve as the state’s sales tax collector if the business has no physical presence in the state and simply takes sales orders by Internet, catalog, or telephone. Congress has under consideration legislation (S. 1832) to overturn the Quill Corporation decision. To support a strong national economy and encourage fiscal responsibility among the states, Congress should reject the legislation. Congress has under consideration legislation (S. 1832 of the 112th Congress) to allow states to require out-of-state businesses that have no connection to the state, other than taking orders over the Internet, by mail, or by telephone from in-state customers and sending the ordered goods by common carrier or U.S. mail, to become sales tax collection agents for the states. Enactment of such legislation would increase the amount of tax dollars millions of Americans pay, encourage states to increase the size and scope of their governments, favor some states over others in granting federal authority, and discourage free-market competition in interstate commerce. Accordingly, Congress should not enact the legislation. >> Click Here to Read the Full Report For more information, visit Heritage's Enterprise and Free Markets webpage, which features research, commentary, blog posts, charts and additional policy resources. Red Tape Rising: Obama-Era Regulation at the Three-Year Mark The regulatory burden on Americans continued to increase throughout 2011, with 32 new major regulations that increase regulatory burdens imposed at a cost of almost $10 billion annually. This regulatory excess is evident in lackluster job creation and anemic economic growth. >>Click Here to Read More About The Heritage Foundation Founded in 1973, The Heritage Foundation is a research and educational institute -- a think tank -- whose mission is to formulate and promote conservative public policies based on the principles of free enterprise, limited government, individual freedom, traditional American values, and a strong national defense. The Heritage Foundation | 214 Massachusetts Ave NE, Washington, DC 20002 | 202.546.4400