We're All Closer to Paying More for Online Purchases

We're All Closer to Paying More for Online PurchasesIt easily made it through the Senate Monday, the law that requires charging a sales tax on Internet purchases with most retailers (only those with less than $1 million in revenue are exempt).
But the bill awaits an actual showdown — and uncertain fate — in the House, where anti-tax conservatives are taking a hard stand.
For most consumers, a victory in the House means paying anywhere from 3 percent to 7.5 percent (range of statewide taxes) more for online purchases, if you don’t already pay a sales tax on your frequently-visited e-commerce sites. The amount of sales tax can vary one way or another depending on the county in which you live.
The debate over the Marketplace Fairness Act, as it is labeled, has intensified.
On the side of those who support the measure are President Obama, traditional retailers of all sizes (Walmart, Target and Best Buy included), Amazon and state lawmakers seeking additional revenue.
On the opposition’s side, there is eBay, “small businesses” that exceed the law’s $1 million requirement for triggering a state’s sales tax collection, and the conservative coalition that opposes higher taxes and additional government intrusion, including Grover Norquist’s Americans for Tax Reform, a group that has instilled fear among Republican lawmakers who dare to approve any tax of any kind.
The bill surprised no one by nearly sailing to victory in the Senate in a 69-27 vote.
The tax law would overturn a decades-long precedent and leave many small online sellers with the task of figuring out how to manage collecting and remitting sales taxes to nearly every state — a big point of contention for eBay and others that oppose the bill.
A 1992 Supreme Court case ruled that states could only require businesses to collect sales tax if the business had a physical presence in the state, such as a store or warehouse.
Out-of-state retailers — back then with no Internet it fell on mostly catalogs — did not have to collect sales tax because it was deemed too cumbersome for them to track and fulfill so many different tax jurisdictions and rules.
Flash forward to 2013. Online shopping has blossomed into a $226 billion-a-year business, and software programs make collecting online sales tax across states easier, proponents of the law say.
After all, proponents say, “bricks-and-mortar” have to collect sales taxes and the law finally levels the field.
To help online business, the Marketplace Fairness Act would also require states to simplify their tax codes and provide retailers the software to assist in tax collection at no charge.
Meanwhile, state lawmakers say they are missing out on much-needed revenue. Overall, states would collect an additional $23 billion in online sales tax revenue if the law was in place, according to a study by the University of Tennessee.

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