Resolution on Sales Tax Collection and E-Commerce Transactions

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WHEREAS, States have the authority under the U.S. Constitution to levy taxes on commerce to raise revenue, including sales taxes; and

WHEREAS, according to Euromonitor International, global e-commerce sales are on track to surpass $1 trillion in 2016 and the United States is the largest e-commerce market; and

WHEREAS, e-commerce makes up an increasingly large part of commerce in individual States; and

WHEREAS, the U.S. Supreme Court held in Quill Corp. v. North Dakota that States cannot compel businesses to collect sales tax for out-of-state transactions, unless the business has a “substantial nexus” in the consumer’s state; and

WHEREAS, individual consumers are responsible for reporting out-of-state purchases to their state in order to determine state tax liability; and

WHEREAS, a study by the University of Tennessee estimated that the inability to collect sales tax from out-of-state e-commerce transactions cost States over $23 billion in lost revenue in 2012 alone; and

WHEREAS, the U.S. Supreme Court also held in Quill Corp. v. North Dakota that “Congress is now free to decide whether, when, and to what extent the States may burden interstate mail order concerns with a duty to collect use taxes.”

NOW, THEREFORE BE IT RESOLVED, The Council of State Governments supports efforts by Congress to regulate e-commerce through legislation that allows States to enforce their existing sales and use tax laws, regardless of the method of transaction, and to collect taxes under state law.

Adopted December 13, 2015 by The Council of State Governments’ Executive Committee.