Resolution on Streamlined Sales and Use Tax Exposed

The Resolution on Streamlined Sales and Use Tax was considered by ALEC's Tax and Fiscal Policy Task Force at the 2011 Annual Meeting on August 4, 2011. This bill was part of the ALEC task force agenda between 2010 and 2012, but due to incomplete information, it is not known if the bill passed in a vote by legislators and lobbyists at ALEC task force meetings, if ALEC sought to distance itself from the bill as the public increased scrutiny of its pay-to-play activities, or if key operative language from the bill has been introduced by an ALEC legislator in a state legislature in the ensuing period or became binding law.

ALEC Draft Bill Text

Summary

This Resolution encourages states to join the Streamlined Sales and Use Tax system.

This system would allow states to collect sales taxes on out of state businesses while conforming their sales tax statutes to a single, uniform system.

Model Resolution

WHEREAS, in 1992 the U.S. Supreme Court held in Quill v. North Dakota that states are allowed to impose sales taxes on its residents who make out of state transactions, but denied states the authority to require the collection of those sales and use taxes by out-of- state sellers that have no physical presence in the taxing state; and

WHEREAS, the Supreme Court based its decision on the burden and cost to out of state sellers to comply with 46 different sales tax regimes; and

WHEREAS, the states working together with business formulated a simplified and uniformed system to administer and collect sales taxes from sellers that reduced the burden and cost of collection; and

WHEREAS, the Streamlined Sales and Use Tax Agreement responds to the concerns raised in the Quill decision while ensuring state sovereignty and the ability of each state legislature to determine its participation in such a system; and

WHEREAS, as of July 1, 2011, the legislatures in 24 states (Arkansas, Georgia, Indiana, Iowa, Kansas, Kentucky, Michigan, Minnesota, Nebraska, Nevada, New Jersey, North Carolina, North Dakota, Ohio, Oklahoma, Rhode Island, South Dakota, Tennessee, Utah, Vermont, Washington, West Virginia, Wisconsin and Wyoming) have given consent to participation in such system by complying their states sales tax statutes to the Agreement; and

WHEREAS, small sellers from main street to large interstate sellers support the states’ efforts to reduce and to eliminate the burden and cost to business to collect the states’ sales taxes; and

WHEREAS, the Center for Business Research at the University of Tennessee has estimated that in fiscal year 2012, that as much as $23 billion in legally levied and owed sales and use taxes will go uncollected by remote sellers; and

WHEREAS, while states and business developed the Streamlined Sales and Use Tax Agreement, the 24 states cannot apply the simplified and uniformed sales tax collection and administration system to out of state sales because of the Quill decision; and

WHEREAS, the U.S. Supreme Court in Quill also implied that this was a matter that can and should be solved by the Congress; and

WHEREAS, the federal Main Street Fairness Act would give states that comply with the simplified and uniformed sales tax administration and collection compact the ability to collect out of state sales taxes;

THEREFORE BE IT RESOLVED that the American Legislative Exchange Council (ALEC) supports the optional decision made by state legislatures to join the Streamlined Sales and Use Tax system; and

BE IT FURTHER RESOLVED that ALEC supports the cooperative effort by states and business to reduce the burden and cost of collecting sales taxes on all sellers while maintaining state sovereignty and the principles of federalism; and

BE IT FURTHER RESOLEVED that ALEC acknowledges that the Congress should give those states in which the legislature decided to participate in the simplified and uniformed sales tax collection and administration compact the ability to collect out of state sales taxes.