North Carolina General Assembly

Senate Finance Committee

16 West Jones Street

Raleigh, North Carolina 27601

Dear Senator,

On behalf of the 44,991 members and supporters of the Council for Citizens Against Government Waste in the state of North Carolina, I urge you to oppose SB 81, regarding the taxation of sales from remote sellers.

SB 81 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 North Carolina ultimately decides to pass SB 81, 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.  SB 81 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 SB 81, which would set a dangerous precedent for remote sellers who sell their products to consumers residing in the state of North Carolina.

Sincerely,

Tom Schatz

President, CCAGW