RESOLUTION ON SALES TAX COLLECTION
AND E-COMMERCE TRANSACTIONS
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.
1
Resolution Summary
This resolution reinforces support for 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. As ecommerce makes up an increasingly large part of commerce in individual states, the
fiscal impact of a state’s ability to collect sales taxes on those transactions continues to
increase. A recent study estimated that states lost $23 billion in revenue in 2012 due
their inability to collect sales tax from out-of-state e-commerce transactions. 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 an office in the
consumer’s state. The Supreme Court also held 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.”
Additional References
•
University of Tennessee 2009 Study
http://www.icsc.org/uploads/gpp/2012-Uncollected-Sales-Tax.pdf
•
S.698 - Marketplace Fairness Act of 2015
https://www.congress.gov/bill/114th-congress/senate-bill/698
•
Quill Corp. v. North Dakota (91-0194), 504 U.S. 298 (1992).
https://www.law.cornell.edu/supct/html/91-0194.ZO.html
CSG Management Directives
The CSG staff will post this resolution, when approved, to CSG’s Web site and work with
Congress, Executive Branch officials, and stakeholders that 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.
2