Michigan Joins Multi-State Sales Tax Pact

Michigan Governor John Engler signed legislation that allows Michigan to join 19 other states in the Streamlined Sales Tax Project, a multi-state tax simplification pact that will ease the rules for sales tax collection on Internet sales. Governor Engler claimed the tax bill will help protect funding for schools.

Congress has refused to rule on Internet sales tax collection due to the varying rates among states and the confusion that would ensue as online retailers try to sort out the tax laws for 50 states. The Supreme Court ruled in 1992 that states could not required online merchants to collect sales tax on sales made to the state's residents.

The intent of the Streamlined Sales Tax Project is to simplify the tax rules for all states so that online retailers can easily collect and remit sales tax. The exact terms of such simplification have yet to be explained. It is assumed that Congress will pass national Internet sales tax legislation if enough states can agree on unified terms.

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