What is fair?

• Author: Behlke, Max
• Position: TRENDS - Online retailers

The Michigan Legislature is the latest to pass legislation that supporters hope will bring a greater level of fairness between Internet and brick-and-mortar retailers when it comes to sales taxes. The legislation requires large online retailers such as Amazon.com to collect and remit the state's 6 percent sales tax.

Although all residents of the 45 states that tax sales are supposed to pay taxes on their online purchases, few do. This is partly due to two Supreme Court rulings--National Bellas Hess v. Illinois in 1967 and Quill Corp. v. North Dakota in 1992--that supported the "nexus" argument that retailers, including catalog and online sellers, need only collect sales taxes for the states where they have a physical presence, or "nexus."

In 2008, New York State was the first to pass an "affiliate nexus law" that expanded the meaning of "nexus" to include work performed by entities within a state that could be attributed to an online or remote vendor, thus requiring the remote vendor to collect and remit New York sales tax.

Since 2008, Alabama, Arkansas, California, Georgia, Illinois, Iowa, Kansas, Maine, Minnesota, Missouri, New York, North Carolina, Pennsylvania, Rhode Island, South Dakota, Vermont and West Virginia have enacted similar legislation to expand the...