The Marketplace Fairness Act of 2013

It was bound to happen and now it is closer to becoming a reality. The Marketplace Fairness Act of 2013, a bill introduced In February 2013, was passed the Senate in March. The bill is an attempt to level the playing field for retail, brick and mortar merchants by enabling them to compete more effectively against E-Commerce Internet Merchants who are not required to pay sales tax and use tax.

Currently, what supporters of the bill call one the largest tax loopholes in our tax code, Internet E-Commerce merchants only have to collect sales tax from a customer if that customer resides in a state where the merchant has a physical presence. This puts an end to that as it is designed “To restore States’ sovereign rights to enforce state and local sales and use tax, and for other purposes.

This bill requires that states simplify their tax codes for these type of merchants, this would be a very arduous task as there are over 9,600 separate taxing jurisdictions nationally. Opponents to the bill claim, among other things, that it would be extremely complicated and inefficient to put in place, as out of state, on line or catalog merchants would basically have to interrogate their clients to determine the particular jurisdiction and subsequent rate that would apply. They also claim the bill would actually give an unfair advantage to brick and mortar, retail merchants.

Although this bill has not yet passed the House Of Representatives and is an amendment to the 2013 budget which we still do not have, there is Bi-Partisan support and the states are pushing hard for the right to tax out of state merchants.

A copy of the Marketplace Fairness Act of 2013 can be found the website of bill sponsor Senator Mike Enzi at http://www.enzi.senate.gov/public/index.cfm/sponsored-legislation . You may also view a copy of a petition to congress by those merchants and citizens who oppose this bill at http://www.rstreet.org/policy-brief/an-open-letter-to-the-united-states-congress-oppose-the-marketplace-fairness-act/ .

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One comment on “The Marketplace Fairness Act of 2013

  1. I do both on-line sales and direct sales from my gallery. I have not read this bill, but as I understand it the burden will be on the on-line merchant to insure that the proper taxes are being paid based on the customers location. In some states and regions there’s both a state sales tax and a local sales tax that can vary from place to place within the state. If we, the on-line merchants are required to know all of these variables it will be an absolute noghtmare. Who or what agency is going to be responsible for supplying the correct current tax rate information for every possible location in the USA? And when and if such an agency is established, I can anticipate that the cost of running that agency will be passed on the merchant as a cost of doing business … again a nightmare! Putting such a damper on the on-line retail industry needs to be thought through with a great deal of care. I understand the states needs for tax revenues, but on-line businesses are sacraficed in th zeal to garner tax revenues that’s like shooting themselves (the states) ij the foot. While I don’t collect out of state sales taxes, I do pay state and federal taxes income tax on my net earnings from on-line sales. Those federal taxes are a benefit to all the states and all its citizens.

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