Answer: Local brick-and-mortar stores operate at a competitive disadvantage with remote sellers who don’t collect or pay taxes. Local stores find themselves serving as showrooms for Internet and catalog sellers. Prospective customers check out the merchandise locally but buy the product online or through a catalog to avoid paying sales tax. Local merchants are at a competitive price disadvantage simply because remote sellers do not collect sales tax.
The U.S. Supreme Court in 1992 said in Quill vs. North Dakota that Congress has the power under the Commerce Clause to create a level playing field for local merchants.
As of January 1, 2017, there are over 3,200 active retailers voluntarily collecting and remitting the sales and use tax in the Streamlined member states. Since the Streamlined Sales and Use Tax Agreement went into effect on October 1, 2005, these retailers have collected over $2.6 billion in sales and use taxes that may have otherwise gone unpaid. Studies have estimated that states lose billions of dollars a year in uncollected sales and use tax. It was estimated that in 2012 alone, the states could be losing as much as $23 billion. Only Congress has the authority to let states require collection of the billions of dollars of sales and use tax that individual purchasers are supposed to be remitting if the retailer does not collect the tax at the time of the sale. Now that the Streamlined member states have made tax collection simple and easy for retailers, Congress can adopt legislation that applies to the products and services sold by remote sellers.