The Marketplace Fairness Act, AKA the new legislation that
will require states to collect sales tax from items purchased
online, is likely to clear the Senate when the final vote is
conducted next month. It is not yet clear if it will do the same
in the House, however, where many conservative lawmakers are
expected to vote against the bill.
, "The issue has received such scant attention in the lower
chamber that neither Speaker John Boehner (R-Ohio) nor Majority
Leader Eric Cantor (R-Va.) has taken public positions on it."
The Hill speculated that the bill will face a "tough battle"
in the House.
The New York Times
concurred with that assessment, noting that online sales tax
legislation has divided the GOP.
Like any tax-related bill in Congress, supporters are
intrigued by the potential gains of taxing online businesses.
, Internet sales accounted for just 1.6 percent of total U.S.
retail sales in 2003. By 2012 they accounted for 5.2 percent of
all sales, amounting to more than $225 billion in revenue.
Traditionally, online businesses were only required to collect
sales tax if they had physical locations in states where sales
tax was already being collected. This is why Best Buy (NYSE:
), Barnes & Noble (NYSE:
), GameStop (NYSE:
) and other brick-and-mortar chains have stayed silent on the
issue -- because they already collect and pay sales tax.
), on the other hand, does not yet have any physical locations
outside of its distribution centers. This has prevented the
online retailer from having to collect sales tax in most
After years of battling the potential legislation, however,
Amazon finally caved and decided to support the bill.
) has not yet done the same, but its chief executive might get
what he wants.
In January, Overstock.com CEO Patrick Byrne
a so-called "Equity in Sales Tax Collection Act Bill," asking for
states to provide tax collection software and to cover any costs
that may be associated with its use.
The former element -- free software -- is a
of the Marketplace Fairness Act.
Freebies are not enough to satisfy eBay (NASDAQ:
), however. John Donahoe, the company's CEO, recently sent out a
on the matter, telling recipients why they should not support the
"Whether you're a consumer who loves the incredible selection
and value that small businesses provide online, or a
small-business seller who relies on the Internet for your
livelihood, this legislation potentially affects you," Donahoe
wrote. "For consumers, it means more money out of your pocket
when you shop online from your favorite seller or small business
Donahoe added that the tax bill would require businesses to
collect sales taxes nationwide from more than 9,600 jurisdictions
across the country, placing an "unnecessary burden" on
has also expressed concerns about the bill, which requires
merchants who earn more than $1 million annually to collect and
pay sales tax.
That site has built a growing marketplace, but its total
merchandise sales ($895.1 million
) pale in comparison to those who support the bill.
In addition to Amazon, Wal-Mart (NYSE:
) has become a prominent supporter.
The Wall Street Journal
, "The drivers of this rush to tax are Wal-Mart and other big
retailers that can more easily absorb the costs of collection
than can smaller competitors."
Louis Bedigian is the Senior Tech Analyst and Features Writer
of Benzinga. You can reach him at 248-636-1322 or
louis(at)benzingapro(dot)com. Follow him
(c) 2013 Benzinga.com. Benzinga does not provide investment
advice. All rights reserved.
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