With a new Congress now in session, Sen. Jon Tester is again pushing to overturn a U.S. Supreme Court decision that requires small local businesses to collect a sales tax on behalf of other taxing states.
If it sounds like deja vu, it should. Tester introduced his Stop Taxing Our Potential Act last June following the Supreme Court’s controversial South Dakota v. Wayfair decision.
“Montanans have spoken, time and time again, against a sales tax,” Tester said. “This bill cuts red tape and makes sure Montana’s small businesses won’t suffer because of sales taxes in other states.”
Following the Supreme Court’s 5-4 decision, Justice Anthony Kennedy said it was “an incorrect interpretation of the commerce clause” to presume that retailers must have a physical presence in a state in order for that state to compel them to collect and remit sales tax.
The resulting decision requires local businesses to collect a sales tax for other states when their consumers buy goods online. The rule also applies to states like Montana that don’t have a sales tax.
Last year’s ruling drew a quick and critical response from Montana Attorney General Tim Fox, one of several state attorneys general to file an amicus brief with the Supreme Court opposing internet sales taxes.
Following the decision, Fox said, “Not only is this decision bad for Montanans purchasing products online from other states, it’s also bad for Montana small business selling products online outside of Montana.”
Sen. Steve Daines also has voiced opposition to the decision, saying “We must act to protect small businesses in Montana and across the country from this overregulation.”
Tester said local businesses could be required to collect and remit a sales tax on behalf of nearly 9,800 state and local tax jurisdictions across the country. Sens. Jeanne Shaheen and Maggie Hassan, both New Hampshire Democrats, and Sen. Jeff Merkley, D-Oregon, signed on as cosponsors to last year’s legislation.
The two New Hampshire lawmakers are again cosponsoring this year’s legislation with Tester.
“New Hampshire’s small businesses are at risk of mountains of new red tape because of a Supreme Court decision that could force them to collect sales taxes for other states,” Hassan said in a statement.
Montanans rejected a statewide sales tax by more than a 2-1 margin in 1971 and again in 1993.