EcommerceBytes-NewsFlash, Number 3047 - April 19, 2013     5 of 5

Online Sales Tax Bill Gaining Senate Momentum

By David A. Utter

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The contentious ongoing issue of charging and collecting sales tax for ecommerce transactions has been a point of concern for many states, all desperate for additional revenue that they feel should be gained as an intrinsic part of making purchases online. Some states, like California, enacted legislation to force sites to collect that sales tax when its residents make purchases.

The state by state approach may soon see the much-debated federal version of an online sales tax bill up and running sooner rather than later. The Wall Street Journal said Senate Majority Leader Harry Reid wants this tax legislation up for a vote as soon as that body completes its work on gun control legislation.

The focus of this debate is the Marketplace Fairness Act. It would give states the authority to compel online and catalog retailers ("remote sellers"), no matter where they are located, to collect sales tax at the time of a transaction.

The debate over ecommerce sales taxes has seen major names in the field take opposing stances on the matter. Amazon and eBay ended up on different sides, with Amazon backing the Marketplace Fairness Act while eBay is against it.

Even though states expect a massive windfall of cash from the compulsory collection of online sales taxes, their optimism may prove too optimistic. A widely-cited University of Tennessee study pegged state losses in tax revenue at as much as $12.65 billion, but California has seen less online sales tax revenue collected than they anticipated once its legislation came into effect.

Such a vote in the Senate could happen soon, as the hotly-debated gun control legislation failed to pass this week. However a Senate aide cited by the Journal hedged by saying no formal decisions have been made about any timetable for voting on the Marketplace Fairness Act.

That hedging may prove wise, as Reid said in July 2012 basically the same thing, anticipating passage of the legislation last year.


About the author:

David A. Utter is a freelance writer based in Lexington, KY. He has covered technology topics from search to security to online business and has been quoted in places like ZDNet and BusinessWeek. He considers his appearance on NPR's "All Things Considered" with long-time host Robert Siegel a delightful highlight. Send your tips to media@davidautter.com and find him on Twitter @davidautter and on LinkedIn.


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