Federal ‘Main Street Fairness Act’-Taxation without representation
By Curtis J. Barry
In the first week of July, U.S. Rep. William Delahunt, D-Mass.) introduced yet again legislation in Congress known as the “Main Street Fairness Act” (H.R. 5660), related to the “Streamlined Sales Tax Agreement (SSTA).” This effort has been tried and failed a number of times but this year it could garner more support.
This legislation would require some retail businesses that engage in remote sales (taking orders via telephone and Internet and sending to another state) to collect the sales and use tax and remit it to the state to which an item was sent or from which the order was placed. This would address the U.S. Supreme Court’s Quill v. North Dakota decision that declared that a business must have business activity in the other state in order for that state to require collection of its sales tax; proponents of Delahunt’s bill believe that the “Quill” decision left the door open for Congress to act in this way.
While the “Main Street Fairness Act” is aimed at the super-web sites like Amazon and eBay, it also catches small businesses in no-sales-tax states like New Hampshire that make products available to purchasers in other states via telephone and Internet. If passed, a business located only in New Hampshire and no nexus in any other state, yet exceeds an amount of sales allowed under a “small business exemption,” will be required to collect and remit sales tax to the states that have signed the SSTA.
The Delahunt bill would allow the “Streamlined Sales Tax Commission,” made up of office holders and bureaucrats from SSTA states, to establish a small business exemption to the tax. This exemption would mean the provisions of the law would only apply to businesses making a certain volume of “remote sales.” It is troublesome that this commission could lower the threshold whenever the states that have signed on to the SSTA need money. The commission may also have the power to make other policy changes that affect New Hampshire businesses, while New Hampshire has no seat at the table.