In a vote last month the U.S. Senate passed the Marketplace Fairness Act which would require all online retailers to collect sales taxes for the states where they ship goods. The Senate voted 69 to 27 to approve the bill but before it can become law the House must approve it. The ability of the bill to pass in the House looks unlikely.
You may be wondering is this a good move for Congress and the nation or does it simply mean more taxation? The thrust behind the bill is the National Retail Foundation’s desire to create taxation consistency between physical and online retailers. The motive is understandable but the method has pitfalls. The current bill would impress significant administrative burdens for small business.
According to Forbes The legislation in its current form does not require the various states to use the same definition of what is taxable and what is not the same tax holidays tax forms etc. This puts the burden on retailers to comply with the laws of 9600 jurisdictions to file monthly tax returns with 46 states and to be subject to audits by states and localities in which they have no physical presence or representation.
Where are things now? Rep. Bob Goodlatte R-Va. stated I have serious concerns regarding the Marketplace Fairness Act passed by the Senate. However€¦I am open to considering legislation concerning this topic and the House is working on alternatives to the bill passed by the Senate. €¦If any action is taken Congress must be involved in the process and the House Judiciary Committee is looking at alternatives that could enable states to collect sales tax revenues without opening the door to aggressive state action against out-of-state companies. Furthermore any alternative in the House would address fairness to all businesses and consumers.
Starting July 1 some states have decided to levy online taxes on items like telephone ringtones digital audio book downloads and music. Overall the Bill or internet tax law does not appear that it will pass in its current form thus online consumers will not have to face additional taxes for the time being.