Bipartisan Internet Sales Tax Bill Introduced

The Marketplace Fairness Act, a new bipartisan bill that would mandate states collect Internet sales tax, has been introduced in the Senate.

The bill replaces the previous Senate measure introduced in July by Sen. Dick Durbin (D-Ill.), which only had Democratic support. Durbin has endorsed this new bill, patterned after a similar piece of legislation introduced in the House, but the bill also has the support of Sen. Mike Enzi (R-Wyo.) and Lamar Alexander (R-Tenn.).

The legislation provides two options for states to collect sales tax from consumers who purchase goods on the Internet. 

States that voluntarily join the Streamlined Sales and Use Tax Agreement could require remote sellers to collect and remit sales and use taxes after 90 days. Some 24 states have currently joined this agreement.

States that do not wish to become members of SSUTA could collect the taxes only if they adopt certain minimum simplification requirements.    

The legislation includes a “small seller exemption,” which exempts sellers who make less than $500,000 in “remote sales” a year.

“This bill empowers states to make the decision themselves,” said Enzi in a statement. “If they choose to collect already existing sales taxes on all purchases, regardless of whether the sale was online or in store, they can. If they want to keep things the way they are, it’s a state’s choice.”

Reports about the bill’s prospects of passage were mixed.

“The future is not bright for this legislation,” Bill McClellan, vice president of government affairs at the Electronic Retailing Association, told Politico, noting the anti-tax sentiment among House Republicans.

However, the bill’s sponsors portrayed it as a matter of fairness.

“Most small business people don’t want a government handout. They don’t want special treatment,” said Durbin in a statement. “They just want to be able to compete fairly against other businesses.”

Other bill sponsors include Senators Tim Johnson (D-S.D.), John Boozman (R-Ark.), Jack Reed (D-R.I.), Roy Blunt (R-Mo.) Sheldon Whitehouse (D-R.I.), Bob Corker (R-Tenn.) and Mark Pryor (D-Ark.).

While one ecommerce giant,, has indicated it supports federal legislation, another noted name in the field, eBay, came out strongly against it.

“This is another Internet sales tax bill that fails to protect small business retailers using the Internet and will unbalance the playing field between giant retailers and small business competitors,” said the auction giant’s vice president for government relations and deputy general counsel, Tod Cohen, in a statement. “It does not make sense to expand Internet sales tax burdens on small businesses at a time when we want entrepreneurs to create jobs and economic activity.”

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