Senate Majority Leader Harry Reid is pushing to bring the Marketplace Fairness Act to the floor for a vote this week, and opponents are entering attack mode against the measure.
Under the new measure, states would be granted the authority to collect sales tax from online retailers across the country, not just those with a physical presence within their borders. Small businesses making less than $1 million would be exempt.
The idea of a nationwide sales tax on Internet transactions has drawn support from both parties as well as businesses such as Amazon and Walmart. Online retailers such as eBay are joined by Senators Ron Wyden (D., Ore.) and Kelly Ayotte (R., N.H.) in opposition.
Earlier this month, the Senate voted 75-24 to consider implementing an online sales tax, suggesting that passage of the bill was likely. Typically, the next step would be to debate or amend the bill in committee, but Reid is proposing a vote on the matter in the next few days.
The Wall Street Journal recently published a very critical editorial on Reid's decision, saying the push is powered by big business and Senators hoping to increase the size of government.
"For Senators curious about what they're voting on, it is the same flawed proposal that Mike Enzi (R., Wyo.) introduced in February. It has been repackaged to qualify for a Senate rule that allows Majority Leader Harry Reid to bypass committee debate and bring it straight to the floor," wrote the WSJ. "Mr. Enzi's Marketplace Fairness Act discriminates against Internet-based businesses by imposing burdens that it does not apply to brick-and-mortar companies. For the first time, online merchants would be forced to collect sales taxes for all of America's estimated 9,600 state and local taxing authorities."
When we spoke with Brian Bieron, eBay's senior director of global public policy, he echoed similar sentiments, saying that the previous vote was intended "to put pressure on the committee process," and skip debating the bill's details.
Supporters, such as TaxCloud CEO David Campbell, claim that it's time for online retailers to be treated the same way as other businesses, and that new tax management software is more than capable of managing any company's needs.
"We're strong supporters," Campbell told iTech Post in a phone interview. "My view is that the reason online retailers don't collect sales tax today is that, in 1967, the Supreme Court thought it would be too difficult [Quill Corp. v. North Dakota]. And I agree, in 1967, keeping track of all these jurisdictions would've been too difficult. But it's certainly not today."
Campbell added that the law requires each state to simplify its own tax code in order to collect from online retailers. Even if there ended up being more than 9,600 jurisdictions, it wouldn't make a difference.
"The number of jurisdictions doesn't matter," he said. "Whether it's 9,600 or 96,000, the point is the software is more than capable of dealing with it, and you don't need some draconian, sweeping public policy that says there can only be a single rate for any state."
Campbell is joined by the National Retail Federation, who recently issued a statement claiming the new law would "fuel competition and create real value for consumers based on service, price, and convenience: not unfair sales tax collection rules."
For its part, eBay is now advocating for some hard numbers as a vote seems imminent. It wants every online business with less than 50 employees or less than $10 million annually in out-of-state sales to be exempt from any Internet sales tax legislation.
"This legislation treats you and big multi-billion dollar online retailers — such as Amazon — exactly the same," eBay's Chief Executive John Donahoe wrote in an emailed statement. "Those fighting for this change refuse to acknowledge that the burden on businesses like yours is far greater than for a big national retailer."
