Twenty years ago the mail-order business was a drop in the giant bucket of national retail sales, about $2.4 billion a year nationwide. With the advances of computer technology, toll-free telephone numbers, express package shipments and the proliferation of catalogue merchandising, mail-order sales have zoomed to an estimated $100 billion a year or more. In the process, 45 states are losing an estimated $2 billion a year in sales and use taxes on out-of-state mail-order business. California's loss is put at about $120 million.
States cannot require out-of-state mail-order houses to collect the tax for them because of a 1967 decision of the U.S. Supreme Court involving the National Bellas Hess firm. The court said that to make the mail-order houses collect taxes for the various states would unconstitutionally interfere with interstate commerce, absent a greater nexus between the houses and their business in the states. But states, cities and counties argue now that the situation has drastically changed, and they are supporting legislation in Congress to require the tax collections. They are correct, and the law should be changed.
The legislation is sponsored by North Dakota lawmakers, but the bills are the outgrowth of the work of a national task force headed by Ernest J. Dronenburg Jr., a member of the California Board of Equalization.