I have been focusing on legislation at the state level in the past few weeks but yesterday a bill (S.336) in the U.S. Congress caught my attention. The Senate passed a bill (Marketplace Fairness Act of 2013) that empowers states to collect sales taxes from Internet purchases. This has long been a sore spot for local business that compete against large retailers that utilize the internet to for their sales platform. Amazon and Ebay are two of the larger ones. However, any business that has an on-line store avoids collecting sales tax unless they have a "presence" within the state.
The bill passed 69 to 27 with by-partisan support but faces an uphill battle in the House. Mnay oppoents in the House see this as a tax increase. The proponents say it's just collecting taxes that are already owed and provides a method for collecting those taxes. Many governors - Republicans and Democrats - have been lobbying the
federal government for years for the authority to collect sales taxes
from online sales. States lost a total of $23 billion last year because they couldn't
collect taxes on out-of-state sales, according to a study done for the
National Conference of State Legislatures.
Supporters say the bill makes it relatively easy for Internet
retailers to comply. States must provide free computer software to help
retailers calculate sales taxes, based on where shoppers live. States
must also establish a single entity to receive Internet sales tax
revenue, so retailers don't have to send it to individual counties or
cities.
Opponents worry the bill would give states too much power
to reach across state lines to enforce their tax laws. States could
audit out-of-state businesses, impose liens on their property and,
ultimately, sue them in state court.
This bill has far reaching consequences. Watch this one closely.
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