Skip to Content


Press Releases

Statement of Ranking Member Nadler for the Hearing on “Examining the Wayfair Decision and its Ramifications for Consumers and Small Businesses”

Today, Congressman Jerrold Nadler (D-NY), Ranking Member of the House Judiciary Committee, delivered the following opening remarks during a Judiciary Committee hearing on “Examining the Wayfair Decision and its Ramifications for Consumers and Small Businesses”:

“Thank you, Mr. Chairman, for holding today’s hearing.

“In 1992, the Supreme Court held in Quill v. North Dakota that a state may collect sales taxes only from businesses with a physical presence within the state.  The Internet, at the time, was just a nascent technology.  In the intervening years, Internet commerce has grown to be a huge share of the economy.  As a result, states have lost substantial revenues from sales taxes they were unable to collect.  In addition, brick and mortar stores are obligated to collect sales taxes from all customers, putting them at a severe competitive disadvantage with their Internet-based counterparts.

“In an effort to respond to these concerns, various legislative proposals have been introduced over the years, including the Marketplace Fairness Act, which I actively supported.  Although one of these bipartisan measures passed the Senate overwhelmingly in 2013, our Committee has unfortunately failed to consider these bills, despite strong bipartisan support.

“The need for federal legislation is now in question because of last month’s Supreme Court decision in South Dakota v. Wayfair, which held that a state may collect sales taxes from any activity with a substantial nexus to the taxing state, thereby overruling Quill’s physical presence requirement.

“In the wake of this decision, the Committee today revisits remote sales tax issues.  I believe there are two principles that should guide this discussion.

“First, the federal government should not intrude on state tax policy.  Although Congress has a constitutional responsibility to ensure the orderly function of interstate commerce, it is also obliged to respect the sovereignty of the states to determine their own sales and use tax policies, in accordance with the input of local electorates.

“Second, we should recognize that we already have constitutional guardrails in place to protect against discriminatory state tax policies.  The Commerce Clause prevents economic discrimination by states ‘and safeguards against discriminatory tax laws that burden interstate commerce.  It does not, however, relieve remote sellers from their ‘just share’ of state taxes, nor does it justify the congressional intrusion on the states’ plenary authority to collect these taxes or to perform critical public functions through state revenue.  With this in mind, the courts are well-equipped to consider the constitutionality of state tax collection.

“Furthermore, the Wayfair decision provides states with a clear roadmap for passing and enforcing laws that do not discriminate against, or unduly burden, interstate commerce.  These features include a safe harbor for sellers with limited transactions within the state; prohibitions against retroactive enforcement; and adopting simplified and uniform tax systems that reduces administrative and compliance costs. 

“In the month since the Wayfair decision, states have begun an extensive and thoughtful conversation on strategies to minimize administrative burdens and uncertainty for remote sellers.  Twenty-four states are already members of the Streamlined Sales and Use Tax Agreement, a voluntary interstate compact that adopts best practices among the states through distribution of free tax software, simple uniform standards, and a requirement that remote businesses are only subject to a single audit for each member state.

“There is also a competitive market of certified service providers that, in addition to collecting and remitting sales tax for remote sellers, also provide businesses with immunity from audit liability.  This service is free in the 24 states that are members of the Streamlined Sales Tax Agreement.  In the other states, businesses may pay for these services at competitive rates. 

“There is a general consensus among tax experts that states will follow the Court’s roadmap in Wayfair and abandon prior enforcement models, such as reporting and notification.  For example, Hawaii, one of the few states that has considered retroactive enforcement, has already announced a reversal of this policy.

“Congress, of course, has a role to play.  But in the absence of examples of discriminatory enforcement by the states, I am skeptical of the need for congressional intervention on the basis of speculative harms.

“In closing, I thank the Chairman as well as our extensive panel of witnesses, who represent a broad array of views on this matter, and who will help us have a substantive discussion, rooted in fact.  Unfortunately, the same cannot be said for President Donald Trump, who weighed in yesterday morning via Twitter, and who completely misrepresented and misunderstood several key facts in just one tweet.

“He wrote, the ‘Amazon Washington Post has gone crazy against me ever since they lost the Internet Tax Case in the U.S. Supreme Court two months ago.’  Let us set aside the fact that Wayfair was decided last month, not two months ago; that Amazon was not a party to the case and did not oppose the decision; and that The Washington Post, although owned by Jeff Bezos, is not part of Amazon at all.  The truth is that many online retailers, including Amazon, already collect sales taxes in states that require it, and the online retailers that did not collect these sales taxes prior to Wayfair have already begun doing so.

“With these facts clarified for the record, I look forward to today’s hearing and I yield back the balance of my time.”


Back to top