• Federal: Attorneys General from States without Sales Taxes Oppose Marketplace Fairness Act
  • June 27, 2013 | Authors: David M. Kall; Susan Millradt McGlone
  • Law Firm: McDonald Hopkins LLC - Cleveland Office
  • As the debate wages on over the desirability of the Marketplace Fairness Act of 2013 (Fairness Act), a trio of state attorneys general have heightened their efforts (and publicity) in opposition. If passed, the Fairness Act enables states to require remote sellers to collect and remit sales taxes to other states on such remote sales. This would mean citizens of and businesses in states where sales taxes do not exist would need to collect and remit sales taxes to other states into which they are making remote sales.

    Last week, USA Today reported that Montana Attorney General Tim Fox formed a bipartisan multistate coalition of state attorneys general to oppose the Fairness Act. Fox plans to have the coalition attack the bill by researching potential constitutional issues with the Fairness Act. The coalition argues the Fairness Act would be a violation of the Due Process Clause and is therefore unconstitutional. It was reported that Fox’s coalition currently consists of the state attorneys general from Oregon and Alaska.

    According to USA Today, Fox argued “Montanans have rejected a sales tax several times, and they certainly don't want to be forced to collect the sales taxes of 9,600 cities, counties and states.” While Fox may be right that citizens of Montana and businesses located in Montana would have to collect and remit sales taxes on qualifying remote sales, the Fairness Act itself does not create a Montana sales tax. Accordingly, a major point of Fox’s argument is that because Montana does not already require collection and remission of sales taxes on its citizens, a federal law should not impose such an obligation on Montana citizens on behalf of other states.

    The attorneys general coalition wrote a letter to congressional representatives urging them to oppose the Fairness Act. By passing the law, the coalitions posits there would be “years of costly, protracted and unnecessary litigation” to follow.

    A total of five states do not have sales tax: Alaska, Delaware, Montana, New Hampshire, and Oregon. It is unclear whether other state attorneys general will join this coalition’s cause.

    The Marketplace Fairness Act of 2013 was also covered in the February 28, 2013, April 25, 2013 and May 9, 2013 Multistate Tax Updates.