The Senate has passed the Marketplace Fairness Act of 2013 and changes to the tax structure of online sales and e-commerce could come if it passes the House.
WASHINGTON, D.C. -Changes to the tax structure of online sales and e-commerce could be coming. This is one of the latest legal concerns for online sales after the Marketplace Fairness Act of 2013 passed the Senate this week. Identified as S. 743, the act is being considered to, “Restore States’ sovereign rights to enforce State and local sales and use tax laws, and for other purposes.”
Passed in a 69-27 Senate vote, proponents tout this legislation as an opportunity to level the playing field between online sales and brick-and-mortar businesses. Introduced by Republican Sen. Michael Enzi of Wyoming, the final passing of this legislation would give States the right to collect sales tax on out-of-state catalog, and online sales. The act doesn’t make collecting these taxes mandatory, but would give States the choice to implement them if they choose.
“For more than a decade I have been working on a solution to put Main Street retailers and online and out-of-state companies on a level playing field,” said Sen. Enzi in a release on his website. “Not because it’s popular, but because it’s fair and it’s the right thing to do. The federal government should not have the right to tell a state how it can manage its finances. This doesn’t cause the federal government to do anything. What it allows is for the states to do what they have already passed laws on. No state should have to come to Washington asking for permission to enforce their own laws.”
Opponents of the legislation argue that calculating and charging the proper taxes for each state would be technologically and financially burdensome. Some believe that large online retailers, like Amazon and E-bay, would not have as difficult a time due to their larger pool of resources and sophisticated online systems. For smaller operations, a State choosing to implement these taxes could mean the end or reduction of business for online or catalog sales in that particular state.
If a company sells less than $1 million online, then that company is exempt from the ruling. The act has been received by the House but has not yet been scheduled for consideration.