Senate Takes Another Shot at Online Sales Tax

July 17, 2014

Senate Takes Another Shot at Online Sales Tax Retail groups are lining up in support of a new bill heading to the U.S. Senate that will enable states to collect sales tax on purchases made through out-of-state online retailers. The House recently passed a bill extending a law prohibiting state and local taxes on Internet access. The bipartisan addition to the House bill will enable states to enforce sales tax rules on online retailers that do not have a physical presence in the state in which they are making a sale.

Retail trade groups representing brick-and-mortar merchants in addition to those online are mostly in favor of “levelling the playing field” for all types of retailers and allowing states to collect sales tax.

“The retail industry has rapidly evolved over the last two decades with e-commerce and mobile commerce, and it is time for Congress to eliminate the sales tax disparity, which disproportionally impacts community and independent retailers,” said a release from the National Retail Federation.

While sponsors said the sales tax bill would create parity between physical and online retailers, some members of the House, which has typically been reluctant to change the rules governing the proposed online sales tax, said the proposed Marketplace and Internet Tax Freedom Act would subject small retailers to a complex maze of compliance burdens from thousands of state and local tax jurisdictions.