Bill Text: NJ AR69 | 2012-2013 | Regular Session | Introduced
Bill Title: Urges Congress and President of United States to enact legislation to allow states to require out-of-state merchants to collect their sales and use tax on sales to their residents.
Spectrum: Partisan Bill (Democrat 3-0)
Status: (Passed) 2012-03-16 - Filed with Secretary of State [AR69 Detail]
Download: New_Jersey-2012-AR69-Introduced.html
Sponsored by:
Assemblyman ALBERT COUTINHO
District 29 (Essex)
SYNOPSIS
Urges Congress and President of United States to enact legislation to allow states to require out-of-state merchants to collect their sales and use tax on sales to their residents.
CURRENT VERSION OF TEXT
As introduced.
An Assembly Resolution urging Congress and the President of the United States to enact legislation to allow a state to require out-of-state merchants to collect the state's sales and use tax on sales to its residents.
Whereas, Nationwide sales by electronic shopping and mail-order houses vaulted from $35 billion in 1992 to $235 billion in 2009 and their share of all retail sales rose similarly from 1.9 percent to 6.5 percent, according to the United States Census Bureau; and
Whereas, Forrester Research projects that e-retail alone will account for 11 percent of all U.S. retail sales by 2015; and
Whereas, New Jersey retailers must collect the State's seven percent sales and use tax from their customers on the sale of taxable goods and services in or to a New Jersey location; and
Whereas, In National Bellas Hess, Inc. v. Department of Revenue of Illinois, 386 U.S. 753 (1967) and Quill Corporation v. North Dakota, 504 U.S. 298 (1992), the Supreme Court of the United States held that the commerce clause of the United States Constitution prohibited a state from requiring out-of-state vendors to collect sales and use tax on their sales to customers in the taxing state if the vendors' only connection with customers in the taxing state is by common carrier or the United States mail; and
Whereas, New Jersey imposes a compensating seven percent use tax that New Jersey residents must pay directly to the State on their taxable purchases from out-of-state vendors who do not collect New Jersey sales and use tax (with a credit for sales taxes paid to other jurisdictions); and
Whereas, New Jersey residents paid only $2.0 million in compensating use tax on their 2009 gross income tax returns, which suggests widespread non-payment of use tax owed and due on out-of-state purchases; and
Whereas, New Jersey has passed conforming legislation with the Streamlined Sales and Use Tax Agreement that seeks to simplify sales and use tax collections and administration by electronic shopping and mail-order houses so as to reduce their burden were they required to comply with state and local sales tax laws; and
Whereas, The low rate of remittance of compensating use tax liabilities has placed New Jersey retailers at a competitive disadvantage with out-of-state vendors in addition to eroding New Jersey sales and use tax collections; and
Whereas, Even the United States Supreme Court surmised in Quill Corporation v. North Dakota that "it is not unlikely that the mail-order industry's dramatic growth over the last quarter century is due in part to the bright-line exemption from state taxation created in Bellas Hess;" and
Whereas, The United States Supreme Court held in Quill v. North Dakota that it was the prerogative of the United States Congress to enact legislation authorizing states to compel the collection of a state's sales and use tax by out-of-state vendors; and
Whereas, Compelling out-of-state vendors to collect New Jersey's sales and use tax would level the sales tax playing field between in-state and out-of-state vendors by ending the ability of taxpayers to evade the payment of tax on out-of-state sales; now, therefore,
Be It Resolved by the General Assembly of the State of New Jersey:
1. The United States Congress and the President of the United States are urged to enact legislation to allow a state to require out-of-state vendors to collect and remit its sales and use taxes on the vendor's sales to customers in the state, thereby rendering possible the equal sales and use tax treatment of in-state and out-of-state vendors.
2. Duly authenticated copies of this resolution, signed by the Speaker of the General Assembly and attested by the Clerk of the General Assembly, shall be transmitted to the President of the United States, the Majority and Minority Leaders of the United States Senate, the Speaker and Minority Leader of the United States House of Representatives, and to every member of Congress elected from this State.
STATEMENT
This Assembly Resolution urges Congress and the President of the United States to enact legislation to allow a state to require out-of-state vendors to collect and remit its sales and use taxes on the vendor's sales to customers in the state, thereby rendering possible the equal sales and use tax treatment of in-state and out-of-state vendors.
New Jersey retailers currently must collect sales and use taxes from their New Jersey customers. Because of a federal prohibition, out-of-state retailers, including electronic shopping and mail-order houses, are not required to do so. Although New Jersey requires its residents to pay compensating use tax directly to the State on their out-of-state purchases (with credits for amounts paid to other jurisdictions), the amounts actually collected point to widespread noncompliance. This arrangement therefore has the effect of discriminating against New Jersey retailers in favor of out-of-state vendors and of dampening State sales and use tax collections.
In Quill Corporation v. North Dakota (1992), the United States Supreme Court held that it was the prerogative of the United States Congress to lay the groundwork for ending this untenable practice. Congress and the President are respectfully urged to do just that.
