U.S. Senate Considers Taxes On Online Sales

The U.S. Senate is currently reviewing The Marketplace Fairness Act of 2013, a piece of legislation that would have a significant impact on online retail sales. When the bill was introduced in 2011 it failed. In its current form its chances of passage are uncertain, although more successful legislation may come out of the committee process.

The legislation, S.743, would require e-commerce retailers doing more than $1 million in online business to collect and remit sales and use taxes with respect to remote sales. It defines “remote sales” as “a sale of goods or services into a state in which the seller would not legally be required to pay, collect, or remit state or local sales and use taxes unless provided by this Act.” Current law requires catalog and online sellers to only collect sales and use tax in states in which they have a physical presence. In the 45 states that collect tax on online purchases, it is up to the consumer to pay the state directly, although this is rarely enforced.

Introduced by Sen. Michael Enzi (R-WY) and with support from both sides of the aisle, the bill is not without controversy. Opponents are concerned about difficulties it creates for sellers and consumers, while its supporters say that it puts brick-and-mortar retailers in sales tax states on even ground with online competition. Groups including the National Governors Association, the Retail Industry Leaders Association and the Competitive Enterprise Institute, and businesses large and small have lent their voice in support or opposition of the bill.

Introduced on April 16, the bill is with the Senate’s Appropriations Committee for discussion. A vote is expected on May 6.


– PPAI Publications


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