Even as India grapples to get States on board for GST, US Senate Passes Internet Sales Tax Legislation

May 13, 2013
1 min read

[Source: www.accountingtoday.com; Author: Michael Cohn]

The Senate has approved legislation requiring online retailers to collect sales taxes from Internet sales, even if they don’t have a physical presence in the state where the customer resides.

The Marketplace Fairness Act has attracted wide support from brick-and-mortar retailers who have seen shoppers coming to their stores to check out merchandise, only to order it online, sometimes while still in the store from their smartphones. Many revenue-starved state governments have also supported the bill. The legislation even garnered the support of e-commerce giant Amazon.com, which has traditionally fought against online sales taxation, but has been expanding its warehouse presence across the country.

Smaller Web retailers have opposed the legislation, however, arguing that it would be too difficult to calculate and collect sales taxes from every state and locality that requires them. They have been supported by eBay, which argued that the exemption level of $1 million in sales for small e-tailers is too low. The bill is also expected to face opposition from many lawmakers in the House, where the prospects for its passage are uncertain. The Senate had approved the bill in nonbinding votes in recent months and was widely expected to eventually pass the legislation (see Senate Democrats Pass Budget with Tax Increases).

The legislation, sponsored by Senators Mike Enzi, R-Wyo., Richard Durbin, D-Ill., Lamar Alexander, R-Tenn., and Heidi Heitkamp, D-N.D., passed the Senate by more than a two to one margin, with a vote of 69-27.

The bill authorizes each member state under the Streamlined Sales and Use Tax Agreement, the multistate agreement for the administration and collection of sales and use taxes adopted on Nov. 12, 2002, to require all sellers not qualifying for a small-seller exception (which is applicable to sellers with annual gross receipts in total U.S. remote sales not exceeding $1 million) to collect and remit sales and use taxes with respect to remote sales under provisions of the agreement, but only if the agreement includes minimum simplification requirements relating to the administration of the tax, audits, and streamlined filing.

The National Retail Federation hailed passage of the legislation. “We applaud Senators Enzi, Durbin, Alexander and Heitkamp and the entire U.S. Senate for standing with local retailers and America’s small business owners in a strong, bi-partisan vote for final passage of the Marketplace Fairness Act, despite a highly-funded misinformation campaign by the legislation’s opposition,

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