This post is the final in a series about the Marketplace Fairness Act. Basically, it lays out the advantages of federal legislation, the underpinnings of the Act, and a brief history of similar proposals to address the inequities caused by online retailers' cyber presence.
Generally speaking, federal taxation is directed primarily towards income tax. That being said, there is nothing in the Constitution that delimits or prevents the federal government from imposing other types of taxation. For example, the Affordable Care Act calls for a tax to be imposed on artificial tanning. The Constitution grants seemingly endless powers to the federal government to tax as they deem appropriate.  Additionally, the troubling condition discussed in the previous blog post implicates the Commerce Clause, therefore, via Supreme Court decisions the federal government has further reaching jurisdiction to impose taxation. Furthermore, theQuill decision expressly mentions that Congress has the power to legislate what constitutes sufficient taxable nexus as they wish. That is, if Congress does not believe that physical presence should be required, then they can overrule Quill and establish a more reasonable standard, so long as the Constitution is not violate. Stated more broadly, the Constitution grants the federal government plenary power to regulate interstate commerce; however, Congress must still be mindful of the limitations found in the Due Process Clause.
Federal legislation, however, is not as simple as the last paragraph makes it sound. The federal government needs to deal with the Tenth Amendment, and issues related to federalism. That is why a uniform initiate needs to be taken by the states in order to ensure validity. Many states have become members of the Streamlined Sales Tax Project. The Streamlined Sales Tax Project is best described by its mission statement:
“The effort that became the Streamlined Sales Tax Governing Board began in
March 2000. The goal of this effort is to find solutions for the complexity in
state sales tax systems that resulted in the U.S. Supreme Court holding (Bellas
Hess v. Illionis and Quill Corp. v. North Dakota) that a state may not require a
seller that does not have a physical presence in the state to collect tax on sales
into the state. The Court ruled that the existing system was too complicated to
impose on a business that did not have a physical presence in the state. The Court
said Congress has the authority to allow states to require remote sellers to collect
tax. The result of this work is the Streamlined Sales and Use Tax Agreement. The purpose of the Agreement is to simplify and modernize sales and use tax
administration in order to substantially reduce the burden of tax compliance.
The Agreement focuses on improving sales and use tax administration systems
for all sellers and for all types of commerce.” [emphasis added]
Essentially, the Streamlined Sales Tax Project’s goal is to form a coalition of states that are willing to simplify their tax codes in order to allow for federal legislation to be passed related to sales and use tax specifically directed towards online retailers. For a state to become a member of the Streamlined Sales Tax Project, they are required to sign a contract called the Streamlined Sales and Use Tax Agreement (“SSUTA”). The SSUTA sets the boundaries for what member states may, may not, and must do in order to take advantage of the protections and benefits of being part of the Streamlined Sales Tax Project (“SSTP”). For example, the SSUTA requires states to follow certain procedure in the collection of sales and use tax; also, the SSUTA establishes a consistent rate of sales and use tax for each member jurisdiction.
The SSTP and SSUTA should be at the heart of any federal legislation, as it is with the Marketplace Fairness Act. If the federal government is to pass legislation changing the definition of taxable nexus to exclude the physical presence requirement, it must be uniform and it must be controlling over every state. Therefore, it is extremely unlikely that Congress would ever be able to pass legislation that expressly overrules Quill because there are too many competing interests involved, and such legislation would be especially susceptible to Constitutional challenges. However, it would be much easier for Congress to pass an interstate compact allowing for the collection of member states’ sales and use tax from online retailers.
In August of 2011, Senator Dick Durbin sponsored and introduced the Main Street Fairness Act. Basically, the Main Street Fairness Act was to act as vehicle for the SSUTA, which is an interstate compact, and according to the Constitution requires Congressional approval. The Act would give the SSTP and SSUTA the power and force of law – without Congressional approval the SSTP cannot require online retailers to collect sales and use tax for its’ members. The Main Street Fairness Act did not get very far in the Senate, instead, the bill has not even been assigned to a Senate Committee yet. 
Meanwhile, while the Main Street Fairness Act sat in purgatory, both the House and the Senateintroduced legislation that is fundamentally the same as the Main Street Fairness Act. All of these bills are substantively the same – they are enabling legislation for the SSTP and SSUTA. The Marketplace Fairness Act is the first of these series of bills to pick up traction.
Rectifying the troubling condition by way of federal legislation holds many advantages over the individualized actions of some of the states. First, federal legislation such as the Marketplace Freedom Act makes it easier for online retailers to calculate and collect taxes, which makes online retailers more apt to do so. This is evident from Amazon’s lobbying efforts to pass such federal legislation and its’ support of the SSTP. Second, such laws only apply to states that wish to participate in the legislation. For a state to be protected by the federal legislation they must sign the SSUTA; this addresses the sovereignty problems that may be implicated by the passing of such a law. Finally, the uniformity of such an act insulates other interests of the state, such as preventing job cuts by online retailers, the closure of distribution centers, and an increased bargaining power in favor of the online retailers. Basically, the passage of federal legislation eliminates the problems described in the previous posts of this blog related to the states’ individualized actions.
Due to the formalistic and practically unjust holding in Quill, online retailers have been able to escape the collection responsibility for state sales and use taxes. Online retailers’ cyber presence creates many problems for states’ ability to collect taxes and increase revenue in a troubling economic time. Additionally, it is apparent that online retailers receive a decisive advantage over brick-and-mortar retailers because of Constitutional safe harbors, such as the Supreme Court’s handling of the Commerce Clause relating to out-of-state retailers. It is time to level the playing field and hold online retailers accountable. States individualized actions are not the answer; there are too many adverse consequences associated with them. A uniform approach such as the SSTP is required; it is time for Congress to act. The Marketplace Fairness Act should be passed into law.
 Task Force on Business Activity, Report of the Task Force on Business Activity Taxes and Nexus of the ABA Section of Taxation State and Local Taxes Committee, 62 Tax Law 935, 940 (2009).
 For example, the Federal Government collects a variety of excise taxes, which are a specific type of sales tax also known as a “sin tax,” because it is levied on the sale of certain undesirable products, such as cigarettes and alcohol. See U.S. Congress Joint Committee on Taxation, Present Law and Historical Overview of the Federal Tax System 32-38 (Jan. 18, 2011), http://www.taxpolicycenter.org/legislation/upload/x-1-11.pdf.
 26 U.S.C § 5000B (2010).
 See generally Philip M. Tatarowicz, Federalism, the Commerce Clause, and Discriminatory State Tax Incentives: a Defense of Unconditional Business Tax Incentives Limited to In-State Activities of the Taxpayer, 60 Tax Law 835, 842-845 (2007).
 There is no doubt that policy is carried out via tax codes. For example, student loan interest is deductible from federal income tax because Congress wants people to go to college. However, there is no viable policy which can be achieved by exempting online retailers from collection responsibilities of state sales and use tax. It can be argued that perhaps Congress wishes to make information more available in rural areas where booksellers do not have storefronts, but if that were the case, Congress would be better served to exempt all sales/use tax on the sale of books, not just those books that are sold online. See generally Yair Listokin, Equity, Efficiency, and Stability: The Importance of Macroeconomics for Evaluating Income Tax Policy, 29 Yale J. on Reg. 45 (2012).
 Tatarowicz, supra note 153, at 844.
 Steve Mintz, Ethics Sage Blog, Should Sales Taxes be Charged on Online Purchases Made by Amazon Customers? (Sep. 5, 2011), http://www.ethicssage.com/2011/09/i-have-previously-blogged-about-whether-states-are-right-in-imposing-a-sales-tax-on-transactions-made-between-amazon-and-its.html; Quill, 504 U.S. at 318.
 Quill, at 305.
 See generally Robert T. Danforth, The Role of Federalism in Administering a National System of Taxation, 57 Tax Law 625, 627 (2004).
 See Streamlined Sales Tax Governing Board, State Info (2012), http://www.streamlinedsalestax.org/index.php? page=state-info.
 Streamlined Sales Tax Governing Board, About Us (2012), http://www.streamlinedsalestax.org/index.php? page=About-Us.
 Institute for Local Self-Reliance, supra nota 131; Streamlined Sales Tax Governing Board, supra note 180.
 See Press Release, National Conference of State Legislatures, States Make It Easier to Collect Online Sales Taxes: Voluntary Program for Retailers Goes into Effect, Provides Compensation, Immunity (Oct. 3, 2005),http://www.ncsl.org/programs/press/2005/pr051003.htm; S. 1452, 112th Cong. (2011); H.R. 3179, 112th Cong. (2011); S. 1832, 112th Cong. (2011). See also Samantha L. Cowne, The Streamlined Sales and Use Tax Agreement: How Entrepreneurs Can Plan for the Uncertain Future of E-Commerce Sales Taxation, 4 Entrepren. Bus. L.J. 133 (2009).
 Passing legislation is no easy task; especially, when such legislation has to do with taxes. While in actually, such federal legislation as the Main Street Fairness Act does not call for an increase in taxation, many legislators as well as constituents may perceive it as doing so, thereby making its’ enactment less likely. The Conservative majority in Congress is extremely adverse to new taxes. However, this same majority is very small business friendly. It will be interesting to see how this plays out. See generally Istackanalyst, The Curious Case Of Amazon And Sales Tax (Apr. 4, 2012), http://www.istock analyst.com/finance/story/5766107/the-curious-case-of-amazon-and-sales-tax.
 Institute for Local Self-Reliance, Main Street Fairness Act (Aug. 21, 2011), http://www.ilsr.org/rule/internet-sales-tax-fairness/3049-2/; S. 1452, 112th Cong. (2011).
 Art. I, § 10, cl. 3; See Paul D. Clement, Bancroft PLLC, Constitutional Difficulties of Proposed Streamlined Sales Tax Legislation 5-20 (2011), available at http://www.ebaymainstreet.com/files/SSTPWhitePaper.pdf.
 Govtrack.us, S. 1452: Main Street Fairness Act (2012), http://www.govtrack.us/congress/bills/112/s1452.
 Known as the Marketplace Equity Act (H.R. 3179, 112th Cong. (2011)).
 Known as the Marketplace Freedom Act (S. 1832, 112th Cong. (2011)).
 See Investopedia, Congress Ready to Act on Online Sales Tax (jan. 6, 2012), http://www.investopedia.com/financial-edge/0112/Congress-Ready-To-Act-On-Online-Sales-Tax.aspx#axzz1v8s ocaNv.
 Nicholas Sohr, Amazon to Pay Sales Tax, Lobby for Federal Internet Legislation: Sparks Renewed Hopes of Reaching a Similar Agreement in Md., The Baltimore Dailey Record, Sep. 30, 2011, available at http://www.lex isnexis.com/lawschool/research/default.aspx?ORIGINATION_CODE=00092&signoff=off.
 See supra Section II(C) of this paper.