That argument is made with growing urgency by groups such as the National Retail Federation, which has called for a level playing field since the late 1990s. It's being pushed by a coalition of big-box stores that calls itself, ironically, the Alliance for Main Street Fairness. And it's behind a fight by the New Jersey Retail Merchants Association against a 22-month sales-tax exemption sought by Amazon as a quid pro quo for building two new warehouses in the Garden State.
It also underlies Pennsylvania's new push to collect taxes directly from consumers for online purchases. For the first time, Pennsylvanians filing income-tax returns for 2011 are being asked to declare how much they owe for their out-of-state purchases.
How did we get to this confusing juncture? Oddly enough, it's mostly a matter of coincidence.
Let's start with this: Whatever you may think, Internet sales aren't sales-tax-free, and never were. Nor were catalog or TV-shopping purchases before them. But it's never been easy for states to impose tax-collection rules on far-off companies - or, for that matter, to reconcile the differences between their own idiosyncratic laws.
In 1992, with the Web still in its infancy, the U.S. Supreme Court ruled that, without action by Congress, states couldn't require catalog merchants to collect sales taxes on their behalf unless the merchant had a substantial physical presence in the state. It wasn't enough to just have customers there.
In the Web's early years, lawmakers were reluctant to intervene. Why mess with a good thing?
