Online Tax Bill Introduced In Congress

by , Feb 14, 2013, 6:10 PM
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Lawmakers in the House and Senate reintroduced a bill on Thursday that would pave the way for tax collection by online retailers.

The Marketplace Fairness Act authorizes state governments to require most out-of-state retailers to collect tax from consumers. The bill, which was introduced by Sen. Mike Enzi (R-Wyo.) and Rep. Steve Womack (R-Ark.), has garnered bipartisan support from more than 50 Senators and Representatives.

Backers say the bill will make brick-and-mortar stores -- which must collect sales tax -- more competitive with online retailers. Currently, out-of-state stores, including online retailers, can't be required to collect sales tax unless they have an in-state presence, such as a physical location. While consumers are supposed to self-report their online purchases and pay sales taxes, observers think that many people don't fully do so.

The measure unveiled on Thursday is similar to a bill introduced in 2011, but with a few revisions. Among the most significant is that the current bill has an exception for small businesses with less than $1 million in sales, while the previous measure only exempted businesses who took in less than $500,000.

A host of retail organizations support the bill, as does online commerce giant Amazon.

But the Direct Marketing Association, which criticized the 2011 measure, says that the current proposal still imposes unwieldy administrative burdens on businesses.

"Our position hasn't changed much on this," says Jerry Cerasale, senior vice president for government affairs at the DMA. He adds that the bill could require businesses to comply with new sets of complicated tax rules, not to mention deadlines and forms, in numerous jurisdictions.

Several states, including New York, recently passed laws requiring Amazon and other retailers to collect sales tax if they pay commissions to in-state affiliate marketers -- including Web publishers that offer links to the sites. It's not yet known whether those measures will survive court challenges. New York state's highest court heard arguments about the issue last week and is expected to issue a decision in the next few months.

 

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