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Let the Online Sales Tax Discussion Begin

  • Feb 12, 2014 | Gail Cole

 Ideas are being gathered.

The Marketplace Fairness Act of 2013 (MFA) is federal legislation that would allow states to impose a sales tax collection requirement on out-of-state businesses making a certain amount of sales within those states, provided the states simplify their sales tax. MFA was approved by the Senate in May 2013, but has since been stalled in the House.

Now it looks like a discussion of the Marketplace Fairness Act of 2013 is underway in the House Judiciary Committee. Representative Jason Chaffetz (R-Utah) is reportedly working “to refine the legislation to address opponents’ concerns….”

A framework to guide the committee’s discussion of online sales tax has been in place since last September, when Chairman Bob Goodlatte (R-VA) released 7 basic principles on remote sales tax.  Rep. Chaffetz is said to be using those principles as he works with Chairman Goodlatte and the sponsors of the Marketplace Fairness Act (H.R. 684 and S. 743) to move the legislation forward. As of this writing, there is no date for a hearing on the Marketplace Fairness Act; however, a hearing to discuss online sales tax is set for March 4.

Rep. Chaffetz is most certainly aware of the controversy surrounding MFA. Overstock.com, which is based in Salt Lake City, has both sued states over online sales tax and severed affiliate relationships in states to avoid triggering a sales tax collection. In otherwords, Overstock is opposed to MFA. Perhaps that’s why Rep. Chaffetz has included Overstock in discussions; the company and the lawmaker “have exchanged ideas about possible changes to the bill.”

Mark Griffin, Overstock’s senior V.P. and general counsel, now says that “a federal solution is achievable.” One reason for the change of heart may be the increasing number of states that are enacting “laws compelling sales tax collection and redefining what constitutes a physical presence in a state.” Physical presence has long been the guiding principle behind sales tax collection. According to Bloomberg BNA, Mr. Griffin “hopes Congress can set groundwork for legislation that passes later, perhaps between the November elections and the end of 2014, or in another year.”

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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.