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Marketplace Fairness: Will Third Vote Be the Charm?

  • Apr 23, 2013 | Gail Cole

 Will federal lawmakers pass the Marketplace Fairness Act of 2013 before all the cherry blossoms fall?

Federal lawmakers have now voted twice in favor of the Marketplace Fairness Act of 2013. The first time was in late March, when, during a nonbonding vote, 75 senators voted in favor of the legislation. The second time was yesterday evening, when 74 senators voted in favor of the motion, beating the 20 senators who opposed it.

The favorable vote allows the Marketplace Fairness Act to bypass the regular vetting process and go straight to the floor for a vote. A healthy handful of senators took issue with that. As Senator Orrin Hatch (R-Utah) noted: "Regular order is not a process designed to protect the power and committee structures…but to make sure that the legislation we pass is technically sound." The senator from Utah said he is not "fundamentally opposed" to the legislation. Rather, he dislikes "the avenue that it is going down."

Senator Hatch was joined in his dissent by Senator Max Baucus (D) of Montana and Senator Kelly Ayote (R-NH). Neither Montana nor New Hampshire has a sales tax, and their senators have long argued that it would be punishing to require businesses from those states to collect and remit sales tax for other states.

Is Marketplace Fairness Inevitable?

President Obama supports the Marketplace Fairness Act of 2013. When asked Monday if the president supports "legislation allowing states to require Internet retailers to collect sales taxes," the White House Press Secretary responded with conviction. Mr. Carney said: "This is simply about leveling the playing field so that bricks-and-mortar businesses that depend on customers to survive are not playing at a disadvantage, competing at a disadvantage, and selling products that others are selling online by not collecting taxes."

A spokesman for the National Retail Federation, which has long argued that brick-and-mortar retailers are "at a competitive disadvantage against online giants," called Marketplace Fairness "inevitable." Yet the New York Times points out that "'[i]nevitable' is not a word used often for legislation" that has the antipathy of such organizations as eBay.

The eBay View

The chief executive of eBay, John J. Donahoe, has taken a different stance. He has sent emails to thousands of eBay sellers, urging them to speak out against the federal legislation. "This legislation treats you and big multi-billion dollar online retailers--such as Amazon--exactly the same." EBay's stance is that "the bill would impose unfair tax burdens on small businesses."

Mr. Donahoe's letter reportedly doesn't reference the fact that "most of eBay's sellers have less than $1 million in out-of-state revenue and … would be exempt from collecting the tax" under the Marketplace Fairness Act.

Jury Says…

Unfair burden or level playing field? Voices on both sides of the aisle back both sentiments. Nonetheless, yesterday's vote seems to suggest those in favor are inching their way closer to passage.

How's that for decisive?

The House is controlled by Republicans--some of whom support Marketplace Fairness, and some of whom do not. The New York Times notes that "it is unclear whether the Republican-controlled House will approve tax legislation if it clears the Senate, as expected."

One way or the other, the Times suggests, all consumers "should be prepared to pay the requisite sales tax."

Is your business prepared for online sales tax?

photo credit: MudflapDC via photopin cc

Sales tax rates, rules, and regulations change frequently. Although we hope you'll find this information helpful, this blog is for informational purposes only and does not provide legal or tax advice.
Gail Cole
Avalara Author
Gail Cole
Gail Cole
Avalara Author Gail Cole
Gail began researching and writing about sales tax in 2012 and has been fascinated with it ever since. She has a penchant for uncovering unusual tax facts, and endeavors to make complex sales tax laws more digestible for both experts and laypeople.