State sales taxes for online and catalog sellers has become a topic of interest in the midst of holiday shopping.
The Marketplace Fairness Act of 2013 is a piece of legislation currently pending in the U.S. Congress. This act would enable state governments to collect sales taxes from retailers that have no physical presence in the state in question — essentially allowing the state to collect taxes across state lines.
According to a news article from USA Today, at least 156 companies, trade groups and lobbying firms are seeking to influence Congress on the act on both sides of the issue. Those in favor of the act are mainly governors, mayors, large retail giants and local businesses.
The current law in the United States is that each state has the option to impose a sales tax on products or services sold in that state. However, catalog and online sellers only need to collect sales tax for states where they have an actual physical presence.
The new law would put these catalog and online sellers on the same level as brick-and-mortar retailers, which have higher overhead than online-only retailers. Plus, advocates for such a bill argue that online-only retailers don’t add to the local economies, in the form of charitable contributions, as to brick-and-mortar operations.
Emily Tucker, president of the Richmond County Chamber of Commerce, is in favor of the bill.
“The marketplace fairness act would level the playing field for our local merchants against online vendors,” Tucker said in an email to The Daily Journal. “As a supporter of small business, we need to protect our small businesses and the Marketplace Fairness Act will lead to a greater economic efficiency for all businesses.”
The concept can currently be found under three very similar bills in Congress — H.R. 684, S.336 and S.743. The bill S.743 has already been voted on by the U.S. Senate on May 6. Sen. Kay Hagan voted in favor of it. The Senate then referred it to the House subcommittee on Regulatory Reform, Commercial And Antitrust Law.
Attempts to reach Hagan and Rep. Richard Hudson for comment on Friday were unsuccessful.
In the USA Today report, companies such as eBay and Overstock.com were identified as lobbying against the bill due to the complication and cost of collecting sales tax for more than 9,000 jurisdictions. The National Conference of State Legislatures estimates that states lost a total of $23 billion in uncollected out-of-state sales tax revenue last year.
It is a discussion for holiday times due to the high number of sales being made during this time of the year. While online retailers may offer a better deal for the consumer by not collecting taxes, this may hurt a number of brick-and-mortar retailers due to the fact that they must collect sales tax.
“It’s an issue of fairness in this new age of retailing,” Tucker said. “We cannot continue to support an environment where legally required taxes are collected and remitted by some, while other businesses get a free pass.”