Maryland General Assembly

House Ways and Means Committee

100 State Circle

Annapolis, Maryland 21401

Dear Delegate,

On behalf of the 30,061 members and supporters of the Council for Citizens Against Government Waste in the state of Maryland, I urge you to oppose HB 1213, regarding the taxation of sales from remote sellers if the seller has more than $10,000 in gross receipts or at least 200 separate transactions.

HB 1213 would impose significant burdens on remote sellers by creating expensive regulatory compliance costs and forcing them to collect and remit taxes to a state in which they do not have a physical presence.  Most states that collect a sales tax have a use tax to collect taxes on remote sales, which is required to be paid to the state in which the individual making the sale resides when he or she files income taxes.  The amount of tax owed is calculated based on the amount of untaxed purchases made during the tax year.

On May 26, 1992, the U.S. Supreme Court ruled in Quill v. North Dakota that if a company did not have a “physical nexus” within the state, that state could not require the company to collect sales taxes from a customer.  Therefore, if Maryland ultimately decides to pass HB 1213, the state opens itself up to costly litigation at the taxpayers’ expense based on the Quill precedent.

The Quill case, along with the Commerce Clause, makes it clear that taxing power must be limited by state borders.  HB 1213 would wipe away this constitutional limitation and force businesses to navigate a complex web of taxing jurisdictions.  It would dramatically raise compliance costs for companies that do not have a physical presence in the state.

We urge you and your fellow legislators to oppose HB 1213, which would set a dangerous precedent for remote sellers who sell their products to consumers residing in the state of Maryland.

Sincerely,

Tom Schatz

President, CCAGW