Three pieces of legislation were introduced in Congress in 2011 to authorize states to require out-of-state retailers, including online sellers, to collect and remit sales tax. In this report, ITIF Senior Analyst Daniel Castro argues that Congress should find a balance that allows states to collect these taxes without imposing a burden on out-of-state retailers. He proposes three principles—fairness, simplicity and parity—that should guide the development of federal legislation and offers specific guidance on how such legislation should be crafted.