2014 Brings Renewed Push for Online Sales Tax
- Jan 9, 2014 | Gail Cole
The Marketplace Fairness Act of 2013 seeks to level the playing field between main street vendors and remote sellers, particularly online retailers. Were it to become law, it would allow states that simplify their sales tax laws to require certain out-of-state vendors to collect and remit sales tax. Currently, most out-of-state vendors are not required to collect sales tax in states where they do not have a physical presence, or nexus.
The Marketplace Fairness Act (MFA) was passed by the Senate in May of 2013 but has since languished in the House. Last September, Chairman Bob Goodlatte (R-VA) of the House Judiciary Committee released 7 Principles on Remote Sales Tax, which he said would frame the discussion of the MFA. Any discussions these principles have framed thus far have occurred in private.
Now retailers are urging Chairman Goodlatte to use those principles to make legislative changes and “make this issue a top priority for the Judiciary Committee in 2014.” According to The Hill, a coalition of trade groups and retailers that includes Amazon.com and the U.S. Chamber of Congress wrote to the chairman earlier this week, urging “him to take up the issue of online sales tax parity….” In the letter, they write that “it is crucial for Congress to address this problem this year to protect millions of jobs.”
Yet support for an online sales tax is not unanimous. EBay has staunchly opposed it from the start, arguing that it will cripple small businesses. The Heartland Institute, a nonprofit think tank, calls MFA “neither fair or helpful to the market.” And in states lacking a general sales tax (Alaska, Delaware, Montana, New Hampshire, and Oregon), people like Montana’s Attorney General Tim Fox and Senator Max Baucus insist the MFA bad for both business and jobs.
Still, the House cannot ignore the issue forever. States are increasingly taking the issue of remote sales tax into their own hands. A growing number of affiliate nexus laws are compelling many online sellers with in-state affiliates to collect sales tax. If vendors have sometimes responded by severing ties with affiliates (as Amazon did in Maine and Minnesota), they sometimes comply with these laws (as Amazon did in New York).