Online Sales Tax Passes Senate, House Approval Uncertain

On May 6, the United States Senate passed a bill that would require online companies collect sales tax, though it was not clear whether the House of Representatives would also approve the measure.

President Obama has already signaled support for the bill, dubbed “The Marketplace Fairness Act.” Its full text can be seen here.

Senate approval had been expected following two prior votes in favor. The final tally was 70 in favor, 24 against, with six not voting. Click here to see how your Senator voted. 

At press time, it was unclear whether the House of Representatives would pass or even take up the measure. A House version of the Senate bill has been introduced, garnering bipartisan support. However, some influential conservative groups, like Americans for Tax Reform, oppose the bill. 

Following Senate passage, Rep. Bob Goodlatte (R-Va.), head of the House Judiciary Committee, which will consider the measure, issued a statement that said he was “open” to the measure, but also looking at alternatives. 

“I do not believe the Marketplace Fairness Act is sufficiently simplified yet,” he said. “While it attempts to make tax collection simpler, it still has a long way to go. There is still not uniformity on definitions and tax rates, so businesses would still be forced to wade through potentially hundreds of tax rates and a host of different tax codes and definitions.” 

EBay, which had previously opposed any attempt for a national Internet sales tax, now says it will approve any version which exempts sellers that sell less than $10 million to out-of-state customers annually or have less than 50 employees. 

The current version exempts sellers that sell less than $1 million annually to out-of-state customers. 

Jewelers of America applauded the measure’s passing, and urged retailers to contact their representatives through its Legislative Action Center.

“This is a historic moment in the fight for sales tax fairness,” said president and CEO David J. Bonaparte in a statement. “For more than a decade, Jewelers of America has urged Congress to level the playing field between brick-and-mortar jewelers and online retailers… We hope to see further action this year.”

The National Retail Federation also welcomed the vote.

“Retailers compete for customers on many different levels, distribution channels and fronts, including service and selection, but they cannot compete on sales tax,” said NRF chairman Stephen I. Sadove in a statement. “Congress needs to address this sales tax disparity and allow retailers to compete freely and fairly.”

The WeRHere Coaliton, a group of small Internet retailers that oppose the bill, warned that “it’s simply not good policy to load massive new online sales tax burdens on small businesses and their consumers when America’s economy is still struggling and small online retailers already face many obstacles.”

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JCK News Director

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