U.S. Senate Votes 75-24 For Internet Sales Tax

Those tax and spenders of both political parties are at it again, now voting 75-24 in favor of legislation known as The Marketplace Fairness Act which compels Online retailers to pay sales taxes no matter where they’re located. Large brick and mortar retailers pushed for the legislation to dampen the impact of big Online retail sites like Ebay where consumers often pay half or less for many of the same products sold in retail stores. The bill does set up some simplified tax schedules for Online retailers, but the new tax scheme also could set up a whole new class of tax violations if Online retailers are unaware they owe taxes or other issues.

With states hurting for revenues, this latest tax scheme really appeals to states looking for more revenue. But, it also makes doing business Online more difficult. While a coalition of Democrats and Republicans who were lobbied extensively by brick and mortar retailers voted in favor of the new legislation, some Like Senator Ron Wyden D-OR, always a reliable consumer advocate and Senator Marco Rubio R-FL, opposed the bill and offered up excellent speeches opposing the new tax scheme.

Some new tax services like TaxCloud, which is owned by FedTax, are beginning to pop up to help assist Online retailers with any new tax and legal requirements of the legislation. And the new tax scheme could well make preparing taxes more difficult, time consuming as well as expensive, deterring some businesses from Online retailing because of all of the paperwork involved if the new legislation becomes law.

The legislation could well boost prices on Ebay, where many low-ball retailers there often sell goods for only a little above cost and depend on volume sales to produce profits.

Some states such as Oregon and New Hampshire do not have a sales tax, so the question of whether Online sales will now be taxed is a good question. While much of the legislation appears to be symbolic in nature, the language of this bill is still a step in the direction of required taxes on Internet commerce.

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  • FedTax

    For clarity, residents in states without sales tax will be completely unaffected by the proposed legislation. Also, your concerns about compliance burdens are address in the bill, and by TaxCloud as you mentioned.