Dear North Carolina Senator,

On behalf of the millions of members of the undersigned organizations, including thousands of North Carolina residents and taxpayers, we write in strong opposition to the recent substitute to S.B. 81 regarding sales tax collection from remote sellers and online marketplaces. As we wrote to you earlier with regard to the original S.B. 81, this legislation is both unconstitutional and unwise, and you would be wise to reject it.

By empowering North Carolina to reach beyond its borders to tax businesses with no physical presence, this bill runs directly counter to Supreme Court precedent limiting state tax authority to businesses with physical representation in your state. This bill would immediately draw your state into a potentially expensive and bitter cycle of litigation that is unlikely to yield a positive result. Simply changing the underlying language to make the marketplace provider responsible for collecting and remitting the taxes does nothing to change this legal risk.

Setting aside the bill’s obvious unconstitutionality, it is decidedly unwise for North Carolina. Just as the original S.B. 81 set a dangerous precedent that, if followed by other states, would open North Carolina businesses up to the taxing authorities of heavy-handed states like California or Illinois, this new substitute legislation creates the same potential hazard. Your own constituents could be subject to audit and enforcement actions in states all across the country in which they have no physical presence.

Furthermore, a system of sales tax enforcement unbounded by any tangible connection like a physical presence would impose significant compliance costs on web-enabled businesses. These businesses would be forced to keep track of all 10,000 taxing jurisdictions across the country, each with its own rates, rules and regulations, while sales in similar brick-and-mortar businesses only require collection of tax for the single jurisdiction in which they’re located.

The U.S. Constitution was written to replace the Articles of Confederation in no small part due to the latter’s failure to prevent a spiraling interior “war” of states who could assert tax and regulatory authority outside their borders. While the Constitution’s Commerce Clause and subsequent jurisprudence make clear that taxing power must be limited by state borders, S.B. 81 seeks to wipe those limits away. That would be dangerous and we urge that you and your fellow legislators act to stop it.


Christian Camara, R Street Institute
Lisa B. Nelson, ALEC Action
Norm Singleton, Campaign for Liberty
Jeffrey L. Mazzella, Center for Individual Freedom
Jessica Melugin, Competitive Enterprise Institute
Wayne Brough, FreedomWorks
Pete Sepp, National Taxpayers Union
David Williams, Taxpayers Protection Alliance
Judson Phillips, Tea Party Nation

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