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US Senate votes in favor of proposed nationwide internet sales taxes

US Senate votes in favor of proposed nationwide internet sales taxes

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Senators have voted 75-to-24 in favor of nationwide changes that would see sales tax levied on a wider range of internet purchases. The decision was purely symbolic — it's a non-binding vote that indicates the Senate supports such legislation — but the overwhelmingly positive response could allow the act to bypass the US Senate Committee on Finance. Should the final bill, the Marketplace Fairness Act of 2013, be approved and written into law, it will essentially eradicate the advantage that smaller internet retailers have over stores with a multi-state presence. As CNET reports, there's been intense lobbying in favor of the bill by advocacy groups including the National Retail Federation and Retail Industry Leaders Association, which count retail giants like Walmart, Best Buy, Home Depot, and Target in their ranks.

Under current law, out-of-state retailers aren't usually obligated to collect taxes on purchases, which has resulted in an estimated $20 billion in sales tax losses across the country. There are some exceptions to the rule, as companies that have a significant local presence are required by some states to levy sales taxes. The perfect example of this exception being enforced is Amazon: the company will soon have to collect taxes in both Massachusetts and Connecticut after acquisitions and the opening regional offices tipped the scales in favor of a significant state presence. Under the new legislation, only businesses with less than $1 million in annual sales would be exempt from collecting sales tax.

Although the large majority of the Senate voted in favor of the proposal, the opposition is still very vocal. The National Taxpayers Union has created a petition and urges the public to make their voices heard by sending it to their local Senators. The union says the Marketplace Fairness Act is "just a way to unleash state tax collectors on the internet," adding that "doing so will hit small businesses with major compliance headaches, overturn constitutional protections against harsh tax administration, and undermine state tax competition." A number of conservatives have also spoken out against the bill. Grover Norquist, founder and President of the Americans for Tax Reform advocacy group, says the Marketplace Fairness Act amounts to a new tax, rather than an enforcement issue, and strongly opposes the legislation.