Jessica M. Karmasek Jun. 12, 2013, 8:30pm

HELENA, Mont. (Legal Newsline) -- Montana Attorney General Tim Fox says he is against a proposed federal Internet sales tax bill that will force his state's businesses to collect the sales taxes of other states, counties and cities.

Joining Fox in opposing the Marketplace Fairness Act is Oregon Attorney General Ellen Rosenblum and Alaska Attorney General Michael Geraghty. Fox is heading up the coalition.

The bill, which is pending in Congress, would enable state governments to collect sales taxes and use taxes from online retailers.

Basically, the proposed measure requires out-of-state retailers to collect sales taxes for products sold over the Internet, but also in catalogs and on the radio or television. The taxes then would be sent to the state where a shopper resides.

Montana, Oregon and Alaska, along with Delaware and New Hampshire, do not have a general sales tax.

"Montanans have rejected a sales tax several times, and they certainly don't want to be forced to collect the sales taxes of 9,600 cities, counties and states," Fox said during a press conference Wednesday.

Fox said the attorneys general have started doing legal research on the constitutional problems with the bill. The research, he said, could be used in a potential challenge to the law if Congress and President Barack Obama enact it.

So far, the bill has passed the U.S. Senate, but awaits action in the U.S. House of Representatives. Obama has indicated he would sign the bill if it gets to his desk.

Montana, Oregon and Alaska argue that the "tax-collecting burden" would "hamstring" businesses with a significant new regulation and without any benefit to them.

Fox noted that in the past, courts have rejected efforts to impose broader taxing responsibilities on companies that do not operate within a state because of the Commerce and Due Process Clauses in the U.S. Constitution.

If a business is not physically present in the taxing jurisdiction, or it does not have sufficient contacts with the taxing jurisdiction, courts have been reluctant to impose tax collecting duties on those companies, he said.

"When I was elected, I pledged to stand up for Montana's interests whenever Washington, D.C., crossed the line," Fox said. "This job-killing bill essentially establishes taxation without representation, penalizes our Main Street businesses and creates a disincentive for our entrepreneurs to expand into new markets outside of Montana."

Other known opponents of the legislation include the Competitive Enterprise Institute, a non-profit think tank, and the National Taxpayers Union.

From Legal Newsline: Reach Jessica Karmasek by email at

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