Ecommerce giant Amazon.com has come out in support of the Marketplace Fairness Act, a federal bill introduced this morning by U.S. Senators Richard J. Durbin (D-IL), Lamar Alexander (R-TN) and Michael B. Enzi (R-WY), that would create a constitutional framework for collecting sales tax online.
If enacted, the bill would allow states to require out of state retailers to collect sales tax at the time of purchase and remit those taxes on behalf of customers, and would facilitate collection on behalf of third party sellers.
The bill would allow states to obtain additional revenue without new taxes or federal spending and will make it easy for consumers and small retailers to comply with state sales tax laws.
“In a 21st Century retail industry, we ought to have a 21st Century system to ensure uniform collection of sales tax,” NRF president and CEO Matthew Shay said in a statement. “A modern approach to this issue would provide states with additional revenue in order to protect jobs that are badly needed to support American families and keep our communities economically healthy.”
“The Marketplace Fairness Act will get government out of the way, restore the free market and close the loophole that has given an unfair advantage to online retailers like Amazon.com for over a decade,” said Katharine Lugar, RILA’s executive vice president for public affairs, in a statement.
Ed Stevens, founder and CEO of ship-to-store platform provider Shopatron, said he is pleased to see the Senate taking action to level the playing field for merchants across America.
“It never made any sense for the government to subsidize online retailers by allowing them to sell without collecting sales tax,” Stevens said. “Now all merchants, local and online, are one step closer to competing on fair and level ground.”
“This is another Internet sales tax bill that fails to protect small business retailers using the Internet and will unbalance the playing field between giant retailers and small business competitors,” said Tod Cohen, vice president for government relations and deputy general counsel at eBay, in a statement. “It does not make sense to expand Internet sales tax burdens on small businesses at a time when we want entrepreneurs to create jobs and economic activity.”
The DMA released a general statement that said the bill is bad policy as it interferes with the free flow of commerce among the states, a principle upon which the United States was founded. “In these difficult economic circumstances, placing new, unfunded mandates on out-of-state companies to comply with complex and changing tax structures in many states around the country will hamper ecommerce, a fast growing segment in our economy,” the statement continued.
The Marketplace Fairness Act is the third major sales tax measure introduced or reintroduced this year.
Online sellers are already required to collect sales tax from customers in their own states, but congressional action is needed because of a 1992 U.S. Supreme Court ruling. The court ruled in Quill v. North Dakota that retailers are required to collect sales tax from out-of-state customers only if they have a physical presence such as a store, warehouse or office in the customer’s state.
The court held that the 45 state and 7,600 local sales tax systems across the nation were too complicated for a retailer to otherwise know how much tax to collect.