On Monday, May 6, the U.S. Senate passed a bill that may end the tax-free online shopping experience in all states.
The Marketplace Fairness Act of 2013 was approved Monday by a margin of 69 to 27. This new proposal, should it be made a law, will require online businesses reporting more than $1 million per year in revenue to secure sales tax from all customers, regardless of the state in which the company resides. The one exception is that residents of the five states without statewide sales tax, Alaska, Delaware, Montana, New Hampshire and Oregon, will not be required to pay this levy on any items shipped to their home state. Businesses based in these territories are not exempt.
Up until now, customers have been asked to pay Internet sales tax on their yearly returns, but the government has observed that, in past years, very few actually have. With the introduction of the Marketplace Fairness Act, all that may change soon.
Currently there are several major online companies that support the bill. Amazon.com, a corporation known for sidestepping sales tax as long as possible, is the largest new advocate of the MFA. The Seattle-based company has been preparing for the inevitable uniform sales tax model to reach the Internet ever since Arkansas passed a bill to collect in that state. However, until this latest proposal was made, Amazon.com was firm in its belief that sales tax did not need to be collected since it was headquartered in Washington, an exempt state.
Greg, an office assistant at Footloose Sports in Mammoth, said, “I believe the bill will level the playing field for local businesses. It should bring back the customers who were lost when they found out that they could shop tax-free online. If it doesn’t completely level the playing field, it will definitely make things a lot closer.”
Most people have grown accustomed to shopping digitally because of the convenience and cheaper prices. Still, the one thing online stores do not offer is instant delivery. They’re getting closer, with subscription services like Amazon Prime, but UPS can still only move so fast.
Going forward, the proposal must pass in the House and then be approved by President Obama. The President’s support is very likely, as the White House said in a statement on April 22 that it “strongly supports provisions in [The Marketplace Fairness Act] that would directly address concerns by granting only those States and localities that have simplified their sales tax systems the option to require all retailers, including those located out-of-state, to collect sales and use taxes already owed under law.”
If the Marketplace Fairness Act of 2013 passes on all levels, the soonest it will be implemented is October 1.
Sources: CNN (http://www.cnn.com/2013/05/06/tech/web/internet-sales-tax/index.html)
The Associated Press (http://hosted.ap.org/dynamic/stories/U/US_INTERNET_SALES_TAX)