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Online sales tax collection takes another step forward with Senate bill introduction

States sales tax collectors, get ready. A bipartisan group of Senators this week introduced legislation they say would level the playing field among online, catalog and bricks-and-mortar retailers.

Sens. Mike Enzi (R-Wyo.), Dick Durbin (D-Ill.) and Lamar Alexander (R-Tenn.) say their bill, the Marketplace Fairness Act, would give states the option of collecting sales taxes they are owed under state law from out-of-state businesses.

Currently, the states must depend on consumers to pay those taxes via state use taxes.

The Senate bill is similar to the Marketplace Equity Act introduced in the House in October.

Follow-up friday icon The Senate's online sales tax measure, like the House version before it, represents a move toward the inevitable collection of state sales taxes by remote sellers, dubbed Amazon taxes. And that earns it this week's Follow-up Friday honors.

The bill would streamline the more than 7,500 sales tax jurisdictions nationwide and give them two options by which to collect the estimated $23 billion a year in sales taxes from online and catalog purchases.

"For over a decade, Congress has been debating how to best allow states to collect sales taxes from online retailers in a way that puts Main Street businesses on a level playing field with online retailers. This bill empowers states to make the decision themselves," said Enzi. "If they choose to collect already existing sales taxes on all purchases, regardless of whether the sale was online or in store, they can. If they want to keep things the way they are, it's a state's choice."

Wanna bet what choice most state tax departments will make?

"If I were president of an online retailer, I would look at this week in Washington, D.C., and I'd make my plans to start collecting sales taxes wherever I sold things in the United States," said Alexander.

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Comments

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Arkansas Tax Return

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State Tax Retunr 2011

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Accounting Business for Sale

Although probably not a very popular topic it has certainly been coming for quite some time. Current state sales tax laws are just not addressing the way business is being conducted today and certainly missing a big portion of revenue.

Ray in MD

Int Retailer: I am not accusing anyone of not following the law. I personally think all sales taxes are regressive and believe progressive taxes on ALL income are the best way to go.
Trying to enforce State "use" taxes with taxpayers is virtually impossible, not gov't laziness.
Failing that, you're looking at a VAT that you'll be collecting & remitting to the IRS, which the Feds & States will share.

Int Retailer

Ray - how is forcing an internet retailer to collect a tax owed by the buyer FAIR. We use NO local services, we would have the undue and until now illegal burden to collect taxes owed by the LOCAL USER. There are ways for the state and local governments to collect these taxes - through the payment processor. It can be seamless, easy, private and quick. Instead they prefer to ask Congress to make small business to collect and remit. This is a huge burden for the small business which is why it is illegal right now.
Internet retailers have a competitive advantage of being able to sell outside their local area. Local B&M business have the competitive advantage being able to sell right then and have the customer take the item home.
Internet retailers follow the law and don't collect USE tax for which the buyer has an obligation to remit. Trying to paint that as UNFAIR is misleading and wrong.
If government needs more money, then they should collect the taxes they are owed under the current laws. Try auditing a few people and then see how quickly people start remitting some of those taxes. Try working with the local CPAs and requiring them to file those returns for their clients. If there are consequences, then people will start paying.

State Tax Retunr 2011

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xcergy

Politicians are looking at lobby $$, not fairness.

You buy online, you owe Use Tax. The 1930s Depression created Sales Tax laws (yes, States were cash strapped then too) Use Tax was a provision added for purchases made out-of-State. Agree or disagree that States have a spending problem, Use Tax is a Constitutional Upheld Law. Problem is, States have done little or nothing to enforce said law.

Worse is the lack of education, as over 60% of the public is unaware that such law exists.

This is a consumer issue, not one for online.

'Fairness' What a MYTH. B&Ms cry that every time a WalMart/Target moves in next door. Even if online did collect tax, they can still out price a B&M b/c of lower overhead. What would B&Ms want next? Fed. mandated price fixing? I think not.

Enough of my rants. The solution is simple. Have the CC Processors collect and remit Sales/Use tax directly to the States (States pay related fees. It's a win-win. States get instant funds, no privacy issues, no exemptions, paperless for online small/large sellers,and the system would work for B&Ms as well.

Simple.

Sadly, simple is a word Lawmakers don't know.

facebook.com/groups/stop.sales.tax.fees.now

Sun

Both are extremely bad reasons to change the tax law. First reason is that we already bailed out the banks with tarp. If states want to collect use tax, enforce the existing laws. Government being lazy is no reason to punish business. Business has no obligation to enforce use tax, only sales tax as an agent for the state. The level playing field is a bs argument. It's always been fair. Blame your government if they don't know how to collect use tax. This whole debate has been brick retailer vs online retailer when the fault has always been non enforcement by government. Now they want to add MORE laws when all that was required was enforcement.

Ray in MD

Folks won't like this, but it HAS to happen if (1) the states are ever going to balance their budgets, including pensions, and (2) local retailers are to compete on a level playing field.

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