All but the smallest out-of-state online retailers would have to collect and remit a use tax to the states, under a planned federal act that Senators Dick Durbin (D-Ill.) and Mike Enzi (R-Wyo.) are expected to introduce in Congress, according to news reports. In an editorial, the Chicago Sun-Times praised the concept of a national use tax as a better solution than the state act Illinois legislators recently passed, requiring out-of-state e-commerce companies that use marketing affiliates based in Illinois to collect and remit a use tax.
But others suggest any tax imposed on e-tailers that don’t have a physical presence in a state is unconstitutional. “It’s a novel — and regrettable — ploy to get around constitutional hurdles to taxing out-of-state vendors,” writes Adam Thierer in a Forbes blog. He suggests the tax would be burdensome for retailers to collect because some 7,400 local tax jurisdictions exist, while it also would likely fail to generate significant revenue. But Durbin pegs the amount of Illinois revenue lost due to uncollected use taxes at $153 million a year, according to the Sun-Times editorial.