Sales and use tax bill introduced in Senate.

Mail-order companies soon may be forced to collect and remit sales and use taxes to states where they send goods if a bill introduced by Senator Dale Bumpers (D-Ark.) is passed. The bill, titled the Tax Fairness for Main Street Business Act of 1994 (S 1825), would authorize a state or local jurisdiction to require out-of-state companies to collect taxes on sales of personal property delivered into that state or locale.

Senator Bumpers's estimate of the total sales and use tax liability of mail orders shipped across state lines in 1992 amounted to nearly $3.3 billion.

"This law would hit virtually everyone," said Doug Lindholm, director of Price Waterhouse's state tax policy group in Washington, D.C. "The big question about its economic impact is to what extent people will stop buying mailorder products."

In his letter introducing the bill, Senator Bumpers, who is chairman of the Senate Committee on Small Business, said, "The intent of this bill is not to injure the mail-order industry .... The competition between mail-order houses and retailers, however, must be fair."

To protect small companies, the bill would exempt mail-order companies with total revenues under $3 million unless they received more than $100,000 from consumers in a given state. Each state would be required to provide a toll-free information service for out-of-state companies.

U.S. Supreme Court decisions have opened the way for such legislation. While the Court has ruled that the commerce clause of the U.S. Constitution prevents a state from requiring a company in another state to collect taxes, it also said Congress has the right to regulate interstate commerce and to grant states the authority to require out-of-state tax collection.