DMA Pans Online Tax Bill

  • November 9, 2011

Lawmakers in the Senate on Wednesday introduced a measure that would enable states to require online retailers to collect sales tax, even when the retailers are located out of state.

The Marketplace Fairness Act, introduced by Sens. Richard J. Durbin (D-Ill.), Lamar Alexander (R-Tenn.) and Michael B. Enzi (R-Wyo.), would apply to all sellers except small business with gross sales less than $500,000. The measure is backed by Amazon, but opposed by others, including the Direct Marketing Association.

“In these difficult economic circumstances, placing new, unfunded mandates on out-of-state companies to comply with complex and changing tax structures in many states around the country will hamper e-commerce, a fast growing segment in our economy,” the DMA stated.

Many states already require consumers to pay sales tax on their online purchases, but have difficulty enforcing those policies. A handful of states, including New York, have enacted laws requiring online retailers that use in-state affiliate marketers to collect sales tax from state residents. As a result, some online retailers severed relationships with affiliates in New York (and other states that have similar rules) rather than collect sales tax from in-state consumers. --Wendy Davis



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