SALES TAX SLICE: CONGRESSIONAL INACTION LIKELY AS VIEWPOINTS SPLINTER ON SALES TAX NEXUS

U.S. CapitolElection years may not be well suited for getting things done. So far this year, Congress has been unable even to agree on recognizing magic as a national treasure. It should come as no surprise then that our representatives have failed to advance nexus legislation. A newly introduced bill seems to indicate that Congress remains divided on the nexus issue.    

As Bloomberg BNA’s Chris Marr reported July 19, Rep. Jim Sensenbrenner (R-Wis.) has introduced the “No Regulation Without Representation Act.” According to the Congressman’s website, the legislation would prohibit states from requiring businesses with no physical presence in the state to collect sales tax. 

The bill would actually go beyond codifying the physical presence requirement established by SCOTUS in Quill Corp. v. North Dakota. Effective Jan. 1, 2017, it would further limit states’ ability to impose sales tax obligations on out-of-state sellers by, among other things, requiring that a business be present in the state for at least 15 days. The bill would also limit the types of activities performed by employees, agents or independent contractors in a state that could give rise to nexus to solicitation, design, installation, and repair activities, and specifically provides that click-through advertising arrangements do not give rise to nexus.     

Meanwhile, the Remote Transactions Parity Act and Marketplace Fairness Act of 2015 both have failed to advance since being introduced last year. Directly opposed to the more recent bill, either one of these would repeal Quill’s physical presence requirement. 

It remains to be seen whether the 115th Congress will be better at building a consensus in this area. As for the outgoing 114th, it looks like they have agreed to disagree.     

Should online retailers remain free from compliance burdens imposed on brick-and-mortar retailers? Continue the discussion on Bloomberg BNA’s State Tax Group on LinkedIn

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