Resolution in Opposition to Taxation or Regulation Without Representation

Summary

Prior to the South Dakota v. Wayfair ruling from the United States Supreme Court, a long line of Supreme Court precedent reaffirmed that the Commerce Clause of the United States Constitution prohibited states from requiring an entity to collect sales taxes on the state’s behalf unless the entity has a “substantial” physical “nexus” within the state. Nevertheless, numerous states had continued to propose and pass legislation to the contrary. This resolution calls on the United States Congress to enact legislation specifying that a state may tax or regulate a person’s activity in interstate commerce only when such person is physically present in the State during the period in which the tax or regulation is imposed.

Resolution in Opposition to Taxation or Regulation Without Representation

Summary:

Prior to the South Dakota v. Wayfair ruling from the United States Supreme Court, a long line of Supreme Court precedent reaffirmed that the Commerce Clause of the United States Constitution prohibited states from requiring an entity to collect sales taxes on the state’s behalf unless the entity has a “substantial” physical “nexus” within the state. Nevertheless, numerous states had continued to propose and pass legislation to the contrary. This resolution calls on the United States Congress to enact legislation specifying that a state may tax or regulate a person’s activity in interstate commerce only when such person is physically present in the State during the period in which the tax or regulation is imposed.

Resolution:

WHEREAS, online businesses face a national onslaught of state sales tax regulations and obligations that defy the Commerce Clause of the United States Constitution;

WHEREAS, our nation’s entrepreneurs are enduring unnecessary and harmful business operating costs that are killing jobs and hurting consumers;

WHEREAS, the Supreme Court in its Wayfair decision determined that “economic nexus” should replace “physical presence” for determining whether a state can impose sales tax obligations on out-of-state businesses;

WHEREAS, the Supreme Court in its Wayfair decision acknowledged that Congress has the authority under the Commerce Clause to limit “the lawful prerogatives of the States” with respect to taxing out-of-state remote sellers;

WHEREAS, some states are now forcing online retailers to report to the state on private and often sensitive online purchases by state residents;

WHEREAS, small businesses are being forced to wage multiple legal challenge against these illegal and unconstitutional moves by states;

WHEREAS, the decentralized nature of the internet makes it uniquely susceptible to multiple and discriminatory taxes across a confusing patchwork of thousands of state and local taxing jurisdictions;

WHEREAS, states should not be allowed to regulate businesses beyond their borders, whether it is imposing tax obligations, labeling, or other regulatory restrictions and mandates on business that are not located within their border;

THEREFORE BE IT RESOLVED, that the state of _______ calls on Congress to exercise its constitutional authority to provide individuals and businesses protection from unlawful state policies that threaten to harm consumers, businesses, and our national economy. Such federal legislation should specify that a state may tax or regulate a person’s activity in interstate commerce only when such a person is physically present in the state during the period in which the tax or regulation is imposed, and that obligations may not extend to non-sellers.  Physical presence should be defined as including maintenance of property or employees in the state, and as excluding tangential connections such as affiliate advertising relationships or transitory presence in the state, among others.