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Online Sales Tax: Is There Life After Death?


 Online sales tax in 2014: dead or not dead?

On November 4, there was talk of “launching a last-minute lobbying flurry” to get online sales tax legislation (Marketplace Fairness Act) signed into law during the 2014 lame duck session. Outgoing Senate Majority/Incoming Senate Minority Leader Harry Reid (D-NV) vowed to do “whatever it takes” to see online sales tax legislation passed. Lobbyists, both for and against an online sales tax, set to work.

Linking the Marketplace Fairness Act to an extension of the Internet Tax Freedom Act has long seemed like a good strategy to some lawmakers, since many opponents of online sales tax are strongly in favor of internet tax freedom. To that end, the Marketplace and Internet Tax Fairness Act (MIFTA) was introduced in the Senate in July 2014. Yet on November 11, House Speaker John Boehner (R-OH) said online sales tax legislation would not move forward in the lame duck session.

Mr. Boehner’s spokesman said in a written statement, “The speaker has made clear in the past he has significant concerns about the bill, and it won’t move forward this year.” Rather, “the House and Senate should work together to extend the moratorium on Internet [access] taxation without further delay.” The Internet Tax Freedom Act is set to expire December 11.

As for internet sales tax, lawmakers would “continue to study the online sales tax problem.”

In spite of Mr. Boehner’s apparent inflexibility on this matter, supporters of online sales tax are “keeping all options open” to “find a path forward this year” under the leadership of Majority Whip Richard Durbin (D-IL) (WSJ).

Is there life after death?

If online sales tax legislation does die in 2014, supporters of an internet sales tax “could resurrect the legislation next year.” To do so, they’ll have to craft a new bill and start anew.

Although disappointed, proponents are not without hope that 2015 will bring success (resurrection surely requires positive thinking). Jason Brewer of the Retail Industry Leaders Association noted that the speaker’s decision “doesn’t change the Senate dynamics, where a clear bipartisan majority wants [the two issues] solved together.”

Reverberations

Lawmakers in both Maryland and Virginia linked transportation funding to the passage of internet sales tax legislation. If online sales tax does not pass 2014, the wholesale gas tax in Virginia will increase by about 5-cents per gallon on January 1, 2015, and in Maryland, the 3% sales tax on gasoline will jump to 5%.

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photo credit: alles-schlumpf via photopin cc


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.