Marketplace Fairness Act: Is It Fair for Online Consumers to Pay More Taxes?

Marketplace Fairness Act: Is It Fair for Online Consumers to Pay More Taxes?This wouldn’t be the first time that consumers fall through the cracks as a result of a simmering debate among politicians and businesses, but the likely approval of the Internet sales tax, or the Marketplace Fairness Act, will mean costlier online purchases for just about everybody.
If you don’t currently pay a sales tax on online purchases, you probably will if the measure is approved, except in those cases where you buy from a small business that generates less than $1 million in revenue.
It’s not just about Amazon (supporter) versus eBay (opponent), the expanded Internet sales tax is about Internet freedom and tax increases, according to opponents of the measure.
The Marketplace Fairness Act will likely see approval in May by the Senate before heading for a tougher fight in the House, where conservatives are on the consumer’s side and some Democrats on the other side.
The measure would allow state and local governments to collect online sales taxes, even if the purchaser lives in another state and the online retailer doesn’t have a physical presence in the home state of the buyer.
The debate is making for strange bedfellows.
Citizens United, the conservative non-profit organization, is better known for helping open the gates of soft money into political campaigns, a movement most Americans don’t like. But Citizens United sees the Marketplace Fairness Act as a tax increase and an infringement on consumers’ Internet freedom.
“This industry (e-commerce sites) has flourished because government has left them alone. But now, special interests are trying to punish online retailers and consumers by creating a new tax on shoppers,” the group said in a statement. “Citizens United believes taxes are too high and we are already taxed way too much.”
Also opposing the expansion of online sales taxes is eBay, the vast congregration of “mom-and-pop” sellers and other entrepreneurs who make a living on the Internet’s largest auction site.
“This legislation treats you and big multi-billion dollar online retailers – such as Amazon – exactly the same,” EBay Chief Executive John Donahoe wrote in an email to millions of eBay users. “Those fighting for this change refuse to acknowledge that the burden on businesses like yours is far greater than for a big national retailer.”
EBay and other opponents decry administrative nightmares they say will befall businesses with revenue over $1 million, which is the level of sales that requires a business to charge the appropriate state or local sales tax under the Marketplact Fairness Act.
If a business takes in less than $1 million a year, it doesn’t have to pay the sales tax. So, if you buy (or sell) something on eBay or Etsy, you likely won’t have to deal with sales tax.
But for businesses that do have to charge the tax, accounting challenges await. The law is suppose to ease this impact, proponents like Amazon, emphasize.
The Marketplace Fairness Act requires states to have a simplified system for administering their sales tax laws and make multistate sales tax collection easier.
States that need to do this can join the 24 states that have already voluntarily adopted the measures of the Streamlined Sales and Use Tax Agreement (SSUTA), which has been developed over the last decade by local goverments and businesses.
“Amazon.com has long supported a simplified nationwide approach that is evenhandedly applied and applicable to all but the smallest volume sellers,” Amazon VP Paul Misener wrote in a letter supporting the bill.

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