WHEREAS, In Quill Corporation v. North Dakota (1992), the U.S. Supreme Court held that the federal Due Process Clause did not prohibit states from requiring collection of a state compensating use tax by out-of-state retailers but that mandatory collection was prohibited by the federal Commerce Clause unless a retailer has a ``physical presence'' in a state; and

    WHEREAS, In the same case the Supreme Court openly invited Congress to exercise its power under the Com- merce Clause to enact legislation which authorized effective collection of state and local compensating use taxes without the requirement of a retailer having a ``physical presence'' in the state imposing the tax; and

    WHEREAS, Congressional inaction since 1992 has led to increased unfairness in state and local sales and com- pensating use tax systems, allowing retail sales by out-of-state companies to escape state and local taxation while in- state retailers are required to collect such taxes; and

    WHEREAS, Technology is reinventing the way Americans do business in the global marketplace of the 21st century, and the 21st century marketplace requires a simplified and fairer sales tax system; and

    WHEREAS, The advent of electronic commerce has made the ``physical presence'' nexus requirement irrelevant to the realities of interstate retail trade, allowing a rapidly growing share of retail sales to escape taxation and imposing an even greater burden on main street retailers with a physical presence in each state; and

    WHEREAS, Expected explosive growth in electronic commerce through the Internet is changing the face of retail sales and can be expected to threaten the collection of future revenues by states and local governments; and

    WHEREAS, Congress is currently considering legislation which would impose a moratorium on the collection of certain taxes on electronic commerce, known generally as the ``Internet Tax Freedom Act,'' without solving the ``physical presence'' problem noted in Quill Corp. v. North Dakota, thereby allowing electronic retailers to compete unfairly with main street retailers; and

    WHEREAS, The National Governors Association has recommended enactment of the ``Internet Development Act of 1998,'' which calls for simplification and streamlining of the state and local sales and use tax while at the same time providing for the collection of state sales and use taxes on sales through the Internet, mail order catalogues, and other similar means; and

    WHEREAS, The ``Internet Development Act of 1998'' would prohibit new federal, state and local taxes on indi- vidual customers for Internet access as well as taxes on bandwidth capacity and bit volume; and

    WHEREAS, The ``Internet Development Act of 1998,'' would allow states which establish one sales tax rate on taxable electronic commerce and mail order purchases to collect the tax from out-of-state sellers, providing for the distribution of part of the collections to cities and counties and achieving greater equity in the sales tax collection burdens on Kansas based and out-of-state retailers: Now, therefore,

    Be it resolved by the Senate of the State of Kansas: That we urge the United States Congress to proceed with great caution in enacting legislation concerning taxation of electronic commerce, and any such legislation should relieve states of the ``physical presence'' nexus requirements of Quill Corp. v. North Dakota in regard to interstate retail sales over the Internet, through the United States mail, or through other means; and

    Be it further resolved: That we urge the United States Congress to give careful consideration to the ``Internet Development Act of 1998,'' recommended by the National Governors Association and supported by the National League of Cities, which calls for tax simplification, reduced administrative burdens for consumers and businesses, and fair taxation of intrastate and interstate retail sales; and

    Be it further resolved: That the Secretary of the Senate be directed to send copies of this resolution to the President of the United States, the Majority Leader of the United States Senate, the Speaker of the United States House of Representatives and each member of the Kansas Congressional Delegation.

Senate Resolution No. 1835 was sponsored by Senators Bond and Hensley.

I hereby certify that the above Resolution originated in the Senate, and was adopted by that body ____________________________________

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President of the Senate.

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Secretary of the Senate.