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eBay Warns Online Sales Tax Bill Could Return in Senate

As lawmakers return to Washington for the fall congressional session, eBay is warning that members of the Senate could renew the push to enact legislation authorizing the collection of sales taxes on online purchases.

The ecommerce heavyweight, one of the most vocal opponents of the sales tax proposal, is cautioning online sellers that supporters of the Marketplace Fairness Act (MFA) are attempting to roll that bill into another, less controversial measure to extend the ban on taxing Internet access.

The Senate passed the MFA as a standalone bill last May, but the House has not taken up the measure.

eBay and other critics of the bill argue that it would deal a major blow to small online sellers, saddling them with the accounting burden of having to collect and remit taxes in every state with a sales tax.

“eBay Inc. continues to believe that small tech-enabled businesses should be protected from a new burdensome sales tax regime and opposes the Senate-passed Marketplace Fairness Act, because it lacks strong small business protections,” the firm said in a post on its Main Street page, where it urges online sellers to convey their opposition to the MFA to their members of Congress.

Under current law, shoppers are already responsible for paying sales taxes on Internet orders when those taxes aren’t collected at the time of the purchase, but most people are either unaware of that obligation or ignore it. As a result, MFA supporters say, billions of dollars in state revenues that are owed go uncollected.

Retailers are generally required to submit sales taxes only in states where they have a physical presence, such as a warehouse or call center. The MFA would authorize states to compel online retailers based in outside jurisdictions to collect and remit sales taxes, provided that they took steps to simplify their tax codes. The bill would also exempt retailers with remote sales under $1 million a year, but critics argue that that threshold needs to be higher to protect small businesses.

In July, Sen. Mike Enzi (R-Wyo.), the sponsor of the MFA, introduced a bill that would couple those sales tax provisions with the Internet Tax Freedom Act (ITFA), legislation that would extend the ban on state and local taxes on Internet access for 10 years.

The House has already passed a standalone bill that would make the ban on access taxes permanent.

Enzi spokesperson Daniel Head told EcommerceBytes that the senator remains committed to advancing both the MFA and ITFA, but declined to comment on the process he might pursue to win passage of the measures.

“Marketplace Fairness and ITFA have both been debated at length and discussed in numerous committee hearings. Neither are new issues and Senator Enzi believes both should be signed into law this year,” Head wrote in an email. “He is keeping all options on the table for moving the legislation forward.”

Kenneth Corbin on Linkedin
Kenneth Corbin
Kenneth Corbin
Kenneth Corbin is a freelance writer based in Washington, D.C. He has written on politics, technology and other subjects since 2007, most recently as the Washington correspondent for InternetNews.com, covering Congress, the White House, the FCC and other regulatory affairs. He can be found on LinkedIn.