The Senate, by a vote of 69-27, passed S. 336, the Marketplace Fairness Act of 2013, a bill designed to restore States’ sovereign rights to enforce State and local sales and use tax laws. The legislation seeks to reverse the decision of Quill Corp. v. North Dakota, 504 US 298 (1992) in which the Supreme Court ruled that States cannot require a retailer to collect sales taxes on its behalf, unless that retailer has a physical presence in the taxing state. The Marketplace Fairness Act eliminates the Quill standard and would allow States that meet certain minimal standards to require retailers in all States to collect taxes for them.
The BLS Library has in its internet collection a report from the Congressional Research Service “Amazon Laws” and Taxation of Internet Sales: Constitutional Analysis which examines efforts by States to tax internet sales. According to the report, New York was one of the first to do so. On March 28, 2013, the New York Court of Appeals found New York’s Amazon tax constitutional in Amazon.com, LLC v. New York State Department of Taxation and Finance. That decision is important because, since New York enacted Tax Law §1101(b)(8)(vi) in 2008, eight other states have passed similar laws.