All retail eyes on D.C. with internet sales tax bill

It’s an interesting thing when the world of fashion and politics collide, sometimes much to the public’s displeasure. For those who are primarily online shoppers they may find themselves dissatisfied with the current actions of Congress. On Capitol Hill the battle rages on to close an internet sales tax loophole that many see as a fiscal issue that should have been handled years ago.

A group of Senators, both Democrat and Republican, have joined forces to propose the Marketplace Fairness Act. A bill that would allow states to collect sales tax on online and other remote sales in the 45 states that collect sales tax in addition to the District of Columbia whether they have a physical presence in the state or not. The bill will also provide for a smaller seller exemption that will prohibit states from requiring remote sellers with less than 1 million dollars in nationwide remote sales to collect sales and use sales tax.

The bill has been proposed by Democratic Senator Dick Durbin of Illinois and Republican Senator Mike Enzi of Wyoming, and is similar to a bill that the Senate attempted to pass back in 2013. Retailers, particularly brick-and-mortar retailers, have been pressuring politicians to pass this legislation for quite some time. For years, Congress was never able to come to a decision about taxing internet sales, while states have taken matters into their own hands on handling the issue of taxing internet sales.

Congress considering Internet Sales Tax Bill

A Supreme Court ruling in the case of Quill v. North Dakota in 1992 stated that retailers were required to collect sales taxes from out-of-state customers only if they had a physical presence in the customer’s state. E-commerce retailers, such as E-bay, have been able to avoid collecting sales tax on online orders in states where they don’t have warehouses or shipping centers, which has helped to make many of their consumers happy by saving them money on sales tax. However, brick-and-mortar retailers puts them at a very obvious competitive price advantage.

Why pay 42 dollars and 80 cents for something that you can get for 40 dollars? In a statement Joe Rinzel, senior vice president for government affairs at the Retail Industry Leaders Association, said: “Ending the special tax treatment afforded to online-only retailers has been a top legislative priority for the retail industry and it’s time to finish the job in 2015. All retailers deserve a fair shot to compete in the free market without the government’s thumb on the scale.”

While brick-and-mortar retailers might be rejoicing over this piece of legislation, but many are extremely displeased. Critics have argued that this is not about creating a more fair market, but rather about raising taxes, and creating an unfair burden upon online retailers to navigate the multiple tax rates in every locality. Shoppers who have long enjoyed avoiding sales tax in certain states are very displeased with the idea of this legislation as well.

Speaker of the House John Boehner managed to kill the internet sales tax bill when it was previously pushed through Congress, and he just might be lucky enough to kill it again. It is no secret his colleague in the Senate, Republican Majority Leader Mitch McConnell, is not a fan of the legislation. It could easily come to a complete halt, and then shoppers will get to enjoy their tax free Ebay goods for the time being. The fashion industry actually has their eyes on Washington D.C. for once, and the outcome is sure to be very divisive.

 

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