{ "id": "R42629", "type": "CRS Report", "typeId": "REPORTS", "number": "R42629", "active": true, "source": "EveryCRSReport.com, University of North Texas Libraries Government Documents Department", "versions": [ { "source": "EveryCRSReport.com", "id": 446948, "date": "2015-10-02", "retrieved": "2016-04-06T18:15:35.054321", "title": "\u201cAmazon Laws\u201d and Taxation of Internet Sales: Constitutional Analysis", "summary": "As more purchases are made over the Internet, states are looking for new ways to collect taxes on online sales. There is a common misperception that the U.S. Constitution prohibits states from taxing Internet sales. This is not true. States may impose sales and use taxes on such transactions, even when the retailer is outside the state. However, if the seller does not have a constitutionally sufficient connection (\u201cnexus\u201d) to the state, then the seller is under no enforceable obligation to collect the tax and remit it to the state. The purchaser is still generally responsible for paying the tax, but few comply and the tax revenue goes uncollected.\nNexus is required by two provisions of the U.S. Constitution: the Fourteenth Amendment\u2019s Due Process Clause and the Commerce Clause. In the 1992 case Quill v. North Dakota, the Supreme Court held that the dormant Commerce Clause requires that a seller have a physical presence in a state before the state may impose tax collection obligations on it, while due process requires only that the seller have purposefully directed contact at the state\u2019s residents. Notably, under its power to regulate commerce, Congress may choose a different standard than physical presence, so long as it is consistent with other provisions of the Constitution, including due process. Congress has not used this authority to provide a different standard, although legislation has been introduced in the 114th Congress (S. 698, Marketplace Fairness Act; H.R. 2775, Remote Transactions Parity Act of 2015).\nIn recent years, some states have enacted laws, often called \u201cAmazon laws\u201d in reference to the Internet retailer, to try to capture uncollected taxes on Internet sales and yet still comply with the Constitution\u2019s requirements. States have used two basic approaches. The first is enacting \u201cclick-through nexus\u201d statutes, which impose the responsibility for collecting tax on those retailers who compensate state residents for placing links on their websites to the retailer\u2019s website (i.e., use online referrals). The other is requiring remote sellers to provide information about sales and taxes to the state and customers. New York was the first state to enact click-through nexus legislation, in 2008. In 2010, Colorado was the first to pass a notification law. \n\u201cAmazon tax laws\u201d have received significant publicity, in part due to questions about their constitutionality and whether they impermissibly impose duties on remote sellers without a sufficient nexus to the state. Both the New York and Colorado laws have been challenged on constitutional grounds. While the New York click-through nexus law was upheld by the state\u2019s highest court against facial challenges on due process and Commerce Clause grounds, Colorado\u2019s notification law was struck down by a federal district court as impermissible under the Commerce Clause for applying to sellers without a physical presence in the state and discriminating against out-of-state retailers. However, the Tenth Circuit Court of Appeals subsequently determined that federal courts do not have jurisdiction to hear the Colorado challenge due to the federal Tax Injunction Act. In March 2015, the U.S. Supreme Court held in Direct Marketing Association v. Brohl that the Tax Injunction Act did not apply to this suit. However, the Court left open the possibility that the suit might be barred under the comity doctrine and instructed the Tenth Circuit to determine if the doctrine applied. Notably, Justice Kennedy wrote a concurrence in which he suggested that Quill was wrongly decided and should be reconsidered in light of technological advances and the development of the Internet.", "type": "CRS Report", "typeId": "REPORTS", "active": true, "formats": [ { "format": "HTML", "encoding": "utf-8", "url": "http://www.crs.gov/Reports/R42629", "sha1": "f9551a38d00d676bf6f37d875f45d3ea6e283b11", "filename": "files/20151002_R42629_f9551a38d00d676bf6f37d875f45d3ea6e283b11.html", "images": null }, { "format": "PDF", "encoding": null, "url": "http://www.crs.gov/Reports/pdf/R42629", "sha1": "1df1d76326a31f05868366a65bae4d50ba6a1efb", "filename": "files/20151002_R42629_1df1d76326a31f05868366a65bae4d50ba6a1efb.pdf", "images": null } ], "topics": [] }, { "source": "University of North Texas Libraries Government Documents Department", "sourceLink": "https://digital.library.unt.edu/ark:/67531/metadc819121/", "id": "R42629_2015Apr09", "date": "2015-04-09", "retrieved": "2016-03-19T13:57:26", "title": "\u201cAmazon Laws\u201d and Taxation of Internet Sales: Constitutional Analysis", "summary": null, "type": "CRS Report", "typeId": "REPORT", "active": false, "formats": [ { "format": "PDF", "filename": "files/20150409_R42629_1e0956579ddd6d164f5653dbf6321307ecfc3fa7.pdf" }, { "format": "HTML", "filename": "files/20150409_R42629_1e0956579ddd6d164f5653dbf6321307ecfc3fa7.html" } ], "topics": [] }, { "source": "University of North Texas Libraries Government Documents Department", "sourceLink": "https://digital.library.unt.edu/ark:/67531/metadc490974/", "id": "R42629_2014Nov28", "date": "2014-11-28", "retrieved": "2015-01-27T19:40:46", "title": "\"Amazon Laws\" and Taxation of Internet Sales: Constitutional Analysis", "summary": "As more purchases are made over the Internet, states are looking for new ways to collect taxes on online sales. There is a common misperception that the U.S. Constitution prohibits states from taxing Internet sales. This report discusses \"Amazon laws\", which try to capture uncollected taxes on Internet sales and yet still comply with the Constitution's requirements.", "type": "CRS Report", "typeId": "REPORT", "active": false, "formats": [ { "format": "PDF", "filename": "files/20141128_R42629_c827010982b57ae1469e27709d20ae13fc6d168c.pdf" }, { "format": "HTML", "filename": "files/20141128_R42629_c827010982b57ae1469e27709d20ae13fc6d168c.html" } ], "topics": [ { "source": "LIV", "id": "Taxation", "name": "Taxation" }, { "source": "LIV", "id": "Sales tax", "name": "Sales tax" }, { "source": "LIV", "id": "Electronic commerce", "name": "Electronic commerce" }, { "source": "LIV", "id": "Business", "name": "Business" }, { "source": "LIV", "id": "Technology", "name": "Technology" } ] }, { "source": "University of North Texas Libraries Government Documents Department", "sourceLink": "https://digital.library.unt.edu/ark:/67531/metadc462168/", "id": "R42629_2013Apr03", "date": "2013-04-03", "retrieved": "2014-12-05T09:57:41", "title": "\"Amazon Laws\" and Taxation of Internet Sales: Constitutional Analysis", "summary": "This report focuses on the ways in which the states' efforts to impose requirements on out-of-state retailers are limited by the Constitution. The report discusses recent state legislation as well as legislation introduced in the two most recent Congresses.", "type": "CRS Report", "typeId": "REPORT", "active": false, "formats": [ { "format": "PDF", "filename": "files/20130403_R42629_5d63bde4c106ae89939daef16edc45e4081094e5.pdf" }, { "format": "HTML", "filename": "files/20130403_R42629_5d63bde4c106ae89939daef16edc45e4081094e5.html" } ], "topics": [ { "source": "LIV", "id": "Taxation", "name": "Taxation" }, { "source": "LIV", "id": "Sales tax", "name": "Sales tax" }, { "source": "LIV", "id": "Electronic commerce", "name": "Electronic commerce" }, { "source": "LIV", "id": "Business", "name": "Business" }, { "source": "LIV", "id": "Technology", "name": "Technology" } ] }, { "source": "University of North Texas Libraries Government Documents Department", "sourceLink": "https://digital.library.unt.edu/ark:/67531/metadc99071/", "id": "R42629_2012Jul26", "date": "2012-07-26", "retrieved": "2012-08-31T21:48:36", "title": "\u201cAmazon\u201d Laws and Taxation of Internet Sales: Constitutional Analysis", "summary": "This report covers ways in which states are attempting to capture taxes on Internet sales. Two basic approaches include imposing tax collection responsibilities on the retailer, and requiring remote sellers to provide tax information to the state and/or it's customers. This report covers the legality of both options.", "type": "CRS Report", "typeId": "REPORT", "active": false, "formats": [ { "format": "PDF", "filename": "files/20120726_R42629_85780fa35028b345c67ac3b7901bd278acd878ac.pdf" }, { "format": "HTML", "filename": "files/20120726_R42629_85780fa35028b345c67ac3b7901bd278acd878ac.html" } ], "topics": [ { "source": "LIV", "id": "Taxation", "name": "Taxation" }, { "source": "LIV", "id": "Sales tax", "name": "Sales tax" }, { "source": "LIV", "id": "Electronic commerce", "name": "Electronic commerce" }, { "source": "LIV", "id": "Business", "name": "Business" }, { "source": "LIV", "id": "Technology", "name": "Technology" } ] } ], "topics": [ "Constitutional Questions" ] }