Nebraska Legislature

Revenue Committee

1445 K Street Lincoln, Nebraska 68508

Dear Senator,

On behalf of the more than 12,685 members and supporters of the Council for Citizens Against Government Waste in the state of Nebraska, I urge you to oppose LB 44, the Remote Seller Sales Tax Collection Act, regarding the taxation of sales from remote sellers.  

LB 44 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 that tax on remote sales, which is paid to the state at the time the taxpayer 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 Nebraska ultimately decides to pass LB 44, 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.  LB 44 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 LB 44, which would set a dangerous precedent for retailers wanting to do business in the state of Nebraska.

Sincerely,

Tom Schatz

President, CCAGW