For the third session in a row, a proposal has been introduced in the United States Senate that would allow states to collect taxes on Internet Sales. This year’s legislation, the Marketplace Fairness Act of 2015, was introduced on March 10 by Senators Mike Enzi (R-WY), Dick Durbin (D-IL), and Heidi Heitkamp (D-ND).

The National Governor’s Association recently sent a letter to Speaker Boehner urging him to allow the Marketplace Fairness Act to come to a vote in the House of Representatives. The proposal to allow states to collect taxes on remote sales has long been a top priority for ICMA and its fellow Big 7 organizations; and it is widely supported by brick-and-mortar retailers who believe they are facing unfair competition from online retailers who are not subject to a sales tax, enabling the online retailers to offer the same items at seemingly lower prices. Many have argued that the tax-free status of online retailers equates to a “de facto government subsidy.”

Related to marketplace fairness is a recent Supreme Court case involving Colorado’s requirement that remote sellers report purchases annually to the Colorado Department of Revenue  The State and Local Legal Center (SLLC) submitted a Supreme Court amicus brief, signed on by ICMA and all members of the Big 7. While the Court held unanimously in Direct Marketing Association v. Brohl that the Tax Injunction Act (TIA) does not bar a federal court from deciding this case, Justice Kennedy wrote in a noteworthy concurring opinion that the “legal system should find an appropriate case for this Court to reexamine Quill.” In the case Kennedy mentions - Quill Corp. v. North Dakota -the Court held that states cannot require retailers with no in-state physical presence to collect use tax.  The SLLC amicus brief discussed the devastating impact Quill has had on state and local government revenues as more purchases shop on-line. Two of the three non-case related citations in Justice Kennedy’s opinion come from the SLLC’s brief.