Sales tax is applied to the buyer, not the seller
The problem with the proposed legislation is that counties, cities, and towns can each set their own tax rates. So the compliance costs are high because of the thousands of different rates. You cannot use something simple like state or zip code to determine tax rate; you have to use geolocation to get the exact jurisdiction. And governments typically levy penalties if you get your sales tax collection wrong. So who is responsible for paying the penalties if the third party tax collection service makes a mistake?
The way this was supposed to go down is that states were supposed to simplify the number of different tax rates before requiring out-of-state businesses to collect their sales taxes. You shouldn't need to subscribe to a sales tax compliance service to do business in the United States.
Specifically, its based on a Dormant Commerce Clause interpretation, to-wit, that States cannot require such taxation of businesses without the kind of nexus specified in Quill without Congress taking specific action to permit the state to do so.
What you see going on right now is Congress taking specific action to permit states, under certain conditions to apply the kind of taxes that they may not be permitted to apply without Congressional permission.
> The problem with the proposed legislation is that counties, cities, and towns can each set their own tax rates. So the compliance costs are high because of the thousands of different rates.
The proposed legislation sets conditions for the states if they want to have access to the privilege Congress is granting with regard to taxation, one of which is that they must provide free-of-cost software for internet retailers to handle the calculations for their states.
> And governments typically levy penalties if you get your sales tax collection wrong. So who is responsible for paying the penalties if the third party tax collection service makes a mistake?
If you are the responsible party for collecting the taxes under the law, you pay the government; if you've paid someone else to do it for you, presumably you've made sure the terms of that contract make them responsible to you for any errors they make, so that they pay both the penalties and any additional costs you face as a result of the error.
> The way this was supposed to go down is that states were supposed to simplify the number of different tax rates before requiring out-of-state businesses to collect their sales taxes.
"Supposed to" based on what? Or are you just puffing up your personal preference for government policy as the way things objectively ought to be?
The proposal actually received a lot of discussion among policy makers, but then got dropped when it became clear that state legislatures wouldn't go through the trouble of reforming their sales taxes without Congress first passing the legislation.
Note that this is a very old reading, and any modern court would likely wash that out, as everything related to human existence is considered interstate commerce by the modern court.