Senate Majority Leader Harry Reid decided last week to push through Wyoming Senator Mike Enzi’s bill, the Marketplace Fairness Act, so that it bypasses any committee debates and thus can be brought to the floor for a vote immediately. A vote on Enzi’s bill, S. 743, is expected this week. The Wall Street Journal noted that in his haste to get the bill to the floor for a vote, Reid wasn't able even to get the text of the bill onto the website of the Library of Congress until this past weekend.
The bill was introduced by Enzi late last year but wasn't voted on before the 112th Congress adjourned. He re-introduced his bill in February, but it languished until Reid decided to fast-track it. The language from the bill expresses the “Sense of Congress:”
It is the sense of Congress that States should have the ability to enforce their existing sales and use tax laws … without regard to the manner in which the sale is transacted … and the right to collect … taxes that are … owed.
This language addresses the Supreme Court’s decision in 1992 in Quill Corp. v. North Dakota that disallowed North Dakota from forcing Quill to collect sales taxes from its customers in North Dakota even though Quill is incorporated in Delaware. The court ruled that since Quill had no physical presence in North Dakota, the state couldn't force Quill to enforce a North Dakota law and remit those taxes to the state.
But in that case, the court added that Congress could change the rules if it disagreed with its decision:
The underlying issue is not only one that Congress may be better qualified to resolve, but also one that Congress has the ultimate power to resolve. No matter how we evaluate the burdens that use taxes impose on interstate commerce, Congress remains free to disagree with our conclusions….
Accordingly, 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.
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