The Marketplace Fairness Act

In 1992 the Supreme Court handed down its ruling in the case of Quill v. North Dakota. That ruling established a legal precedent that prevented states from compelling an out of state retailer from collecting and remitting sales taxes on purchases made to and delivered to customers in states in which the retailer did not have a physical presence. The ruling was based on the Commerce Clause, which prevents any state from imposing any restrictions on the free trade between states unless specifically addressed by federal law. And that is the basis for the Marketplace Fairness Act, to set into federal law the application of sales taxes on interstate commerce.

The Marketplace Fairness Act was first introduced to the House of Representatives in 2011 in recognition of the ever increasing presence of the internet in the retail market space. Its authors intended the act to provide a common, simplified means for the computation and remittance of sales taxes throughout the country. The bill was unable to get to a congressional vote and died. It was re-intoroduced in 2013 and once again failed to make it to a congressional vote.

Now the Marketplace Fairness Act is pretty much a moot point since Quill v. North Dakota has been overturned by the the June 21, 2018 Supreme Court ruling in the case of South Dakota v. Wayfair. Still, it will likely see passage, in some form, eventually. But until that happens, it will be up to the individual states to determine how they will pursue their portion of currently uncollected sales tax from on-line sales, estimated to be in excess of 3 billion dollars this year alone. For more information about South Dakota v. Wayfair and how its ruling may affect you, CLICK HERE.