Retailers Love Latest Attempt At Online Sales Tax Law, eBay Not So Much

If this bill passes, lots of you will be sad to see taxes showing up on your Amazon invoices.

If this bill passes, lots of you will be sad to see taxes showing up on your Amazon invoices.

As we mentioned yesterday, lawmakers in D.C. are going to take another stab at a federal law that would give states the ability to collect taxes from online retailers. Not surprisingly, the retail industry loves it, while eBay says it will only hurt small businesses.

Introduced in the House of Representatives by Congresswoman Jackie Speier of California and Congressman Steve Womack of Arkansas, the bipartisan Marketplace Fairness Act of 2013, is also being taken to the Senate by Senator Mike Enzi of Wyoming, Senator Dick Durbin of Illinois, and Tennessee’s Senator Lamar Alexander.

The legislation hopes to put an end to the ongoing battles between online retailers like Amazon and states where those e-tailers don’t have a physical presence.

“As a result of an outdated Supreme Court ruling that hasn’t kept up with modern technology and the 21st century marketplace, our local brick and mortar retailers are struggling to stay afloat,” says Speier. “Instant comparison shopping by smartphone app has converted local storefronts into showrooms for online-only stores.”

The bill gives states the authority to require that e-tailers and other “remote sellers” collect sales tax on purchases made by residents in that state.

The law does not require that states use this authority; it merely gives each state the power to decide whether to compel the remote sellers to collect taxes.

Any of the 24 states that have already signed the Streamlined Sales and Use Tax Agreement will be allowed to require remote retailers to collect state and local sales and use taxes.

Those 26 remaining states that are not yet SSUTA members must adopt minimum simplification requirements outlined in the bill before they can start compelling remote sellers to collect the tax.

As with previous, failed versions of this legislation, the new HFA contains a small seller exception that would prohibit states from requiring remote sellers with less than $1 million in annual nationwide remote sales to collect taxes.

Not surprisingly, the National Retail Foundation is all for the bill.

“For far too long local retailers and small business owners have been saddled with a competitive disadvantage with online retailers – sales taxes,” NRF Senior Vice President for Government Relations David French said. “While store owners collect and remit state and local sales taxes their digital competitors are off the hook – and benefiting because of it.”

Meanwhile, eBay has once again expressed its concern with the bill. The company has opposed previous legislation, claiming that even the small business exemption would still leave a large number of smaller retailers harmed in the end:

“Small business retailers using the Internet are innovators using technology to grow a business, create jobs in local communities, and serve consumers with competitive alternatives. Congress should reject any Internet sales tax legislation that throws a new tax barrier in front of small businesses. A meaningful small business exemption that protects all small business retailers is a must.”

Want more consumer news? Visit our parent organization, Consumer Reports, for the latest on scams, recalls, and other consumer issues.