Representative Paul Hodes (D-NH) introduced today a bipartisan resolution to protect online out-of-state sellers from having to collect taxes in states where they have no physical presence.

The resolution (H.R. 1570) "Supporting the Preservation of Internet Entrepreneurs and Small Businesses," says that Congress should not impose unfair tax collection burdens that would hurt the U.S. economy and consumers.

The resolution is a response to legislation introduced in July 2010 by Representative Bill Delahunt (D, Mass.) which would force all U.S. online retailers across the nation to become tax collectors for states that have joined the Streamlined Sales Tax Project (SSTP).

"Don’t believe it when tax collectors say their software makes it trivial for tiny sellers to collect everyone’s sales tax," said Steve DelBianco, executive director of NetChoice.

"Small sellers will spend thousands of dollars making changes to their website software, plus endless time and accounting fees to handle exceptions, customer questions, and state tax audits."

Under the 1992 U.S. Supreme Court Quill v. North Dakota decision, the court found that the 45 state and 7,600 local sales tax systems across the country were too complicated for a retailer realistically to know how much tax to collect and remit.

Currently online retailers are only required to collect sales tax from out-of-state customers if they have a physical presence, such as a brick-and-mortar store.

"Representative Hodes and his colleagues are to be commended for standing against a national tax system that would saddle small retailers with new collection and compliance burdens," said DelBianco.

"We all support a simpler tax system, but the streamlined sales tax project has become the proverbial wolf in sheep’s clothing."