The Internet has opened up an exciting channel of commerce, but it has also opened questions about how to properly tax sales made over the Internet. Under the Supreme Court's Quill decision, remote sellers, such as an Internet retailer, are not required to collect sales and use taxes for sales made to buyers located in states where the seller does not have a physical presence.

The Quill decision has resulted in a situation where large Internet retailers do not collect sales taxes, while traditional "brick-and-mortar stores" are required to collect sales taxes on all sales. The absence of sales tax collection on Internet sales risks eroding the sales tax base of the states and providing internet retailers with unfair tax advantages that are not available to traditional brick and mortar retailers. The Quill decision made clear that Congress has the authority to take action to cure this inequity.

Instead of enacting legislation to provide a level playing field for sales tax collection, legislation was enacted in 1998 to impose a 3-year moratorium on new Internet access taxes and on multiple or discriminatory taxes on electronic commerce, and on November 28, 2001, legislation was signed that extended the moratorium for an additional 2 years. The legislation did not address the more important issue of how to collect sales taxes on remote sales.

Unfortunately, merely extending the current moratorium does nothing to address the main issue of allowing states to require remote retailers to collect and remit sales taxes. Extending the moratorium only delays a decision on this issue and allows the current inequitable situation to continue to the detriment of states and the "bricks and mortar" retailers that compete with remote sellers. Therefore, the e-Fairness Coalition urges Congress, the Administration, and the state and local governments to work together to simplify state sales tax systems and provide equitable sales tax collection for all retail sales.