In all fairness ...

• Author: Kuhl, Jon
• Position: Trends

There is power in numbers. State legislators from across the country descended on Capitol Hill last month to urge Congress to plug a loophole that is costing states $23 billion a year. They were supporting the Marketplace Fairness Act, a congressional bill that would allow states to require out-of-state retailers to collect sales taxes on remote purchases. NCSL sponsored its largest legislative lobbying day in December while lawmakers met for briefings on federal issues affecting states at the organization's Fall Forum in Washington, D.C.

"The stars are finally aligning in our favor for passage," Utah state Senator Curt Bramble (R) told fellow state legislators at the event. "The Marketplace Fairness Act permits Congress to provide funds for the states without funds coming from the states. We are asking for control over our own destiny."

State lawmakers met with some of the bill's sponsors, including U.S. Senator Michael Enzi (R) of Wyoming and U.S. Representatives Steve Womack (R) of Arkansas and Peter Welch (D) of Vermont. They also visited with their own congressional delegations, and met with U.S. Senate Majority Leader Harry Reid (D) of Nevada and U.S. Senate Minority Leader Mitch McConnell (R) of Kentucky.

Policymakers from both sides of the aisle have joined forces to support the Marketplace Fairness Act because they believe brick-and-mortar retailers are at an unfair disadvantage by having to collect sales taxes from consumers while their online, mail-order and telephone competitors do not.

University of Tennessee researchers estimate that state and local governments lost at least $23.3 billion in 2012 in uncollected taxes from out-of-state sales, with more than $11.3 billion from online sales. Marketplace Fairness proponents argue that as electronic commerce continues to grow, so will losses to state and local revenues.

The U.S. Supreme Court ruled in Quill v. North Dakota in 1992 that although customers who purchase goods remotely owe state...