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Senate Passes Internet Sales Tax Proposal

Measure requires online retailers to collect sales tax


NewLettersYesterday, the U.S. Senate passed the Marketplace Fairness Act that requires online retailers to collect state sales taxes.

The measure — which passed the Senate 69-27 — gives the individual states the authority to require online retailers to collect and pass along state sales taxes, Bloomberg reports.

Previously, online stores were only required to collect sales taxes in states where they had a physical location. Therefore, the majority of companies collected — and passed on to the states — only a small fraction of possible taxes. This has drawn protests for years from brick-and-mortar retailers who argue that it places them at a pricing disadvantage against their online rivals.

Opposition to the bill — spearheaded by eBay (NASDAQ:EBAY) — is strong. Members of the House of Representatives from states with no sales tax and those with a significant number of online businesses oppose the measure. Speaker of the House John Boehner (R-OH) has declined to comment on whether the House will take up the bill in the current session.

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