Close this menu

The SSTP Train(wreck)

Last month, I described a Hill briefing I gave, where I saw some of the confusion surrounding the Streamlined Sales Tax Project (SSTP).

Today, libertarian champion Adam Thierer commented over at Tech Liberation Front. I am relieved to have Adam re-engage in the SSTP debate, although I don’t think it’s right to assume that the Quill decision is acting as a brake on the trainwreck that is SSTP.  (Gosh how I wish it were true)

In his post, Adam suggested that:

the only thing that’s held back state and local efforts to impose such sales tax collection burdens on Internet vendors so far is an old 1992 Supreme Court decision, Quill Corp. v. North Dakota

Basically the court was just restating the old “No taxation without representation” motto upon which our country was founded.

“Taxation without representation” was a factor in Quill, but the ruling held that North Dakota broke no "due process" rules in attempting to regulate a retailer (Quill) who choose to ship products into North Dakota.  It’s going to take more than that to stop a tax collector. 

The good news is that Quill also held that that the present patchwork system of 7,500 taxing jurisdictions with contradictory rules and multiple filing requirements constituted an unreasonable burden on interstate commerce.  That’s the only reason North Dakota wasn’t allowed to force Quill to collect & remit sales tax on shipments to residents of the state.

Quill essentially left the states with two options:

1. Simplify their sales tax systems and come back to the Court to show it’s no longer an unreasonable burden on interstate commerce; or

2. Since Congress has the power to regulate interstate commerce, ask them to force sellers to collect remote sales taxes (whether they’re simple or not!)

A handful of states are pursuing option 2, and they’re making dangerous progress.  Particularly when you give them a Democratic majority.  And you have to worry that SSTP proponents will try using the internet access tax moratorium bill as a locomotive to pull their train through Congress this year.

I’m reluctant to disagree with an ally like Adam, but I think we all need to wake up to the real threat that SSTP could impose new burdens on e-commerce retailers.  I can hear that train a-coming…