US Senate approves sales tax on online retailers

08 May '13

2 min read

The US Senate has passed the ‘Marketplace Fairness Act’ that would impose sales tax on online retailers by 69-27 vote.

At present, only companies with brick-and-mortar stores in the US have to pay online sales tax. However, retailers with physical presence would not immediately get “a level-playing field” with Internet retailers, as the bill would now be sent to the House of Representatives.

If the bill becomes a law, it would only apply to retailers who sell over US$ 1 million worth of goods online during a year.

If it comes into force, the new law would make online retailers like Amazon, eBay and others to pay sales tax, even in those states where they do not have offices or distribution centres.

The proposed legislation states that sales taxes would be collected by different states and sent to the states where the buyers live.

The bill co-sponsored by Senators Mike Enzi and Dick Durbin also expects states to set up a single entity to pool in Internet tax revenue.

“Today’s action in the Senate is a significant step for sales tax fairness and we look forward to a robust debate in the U.S. House of Representatives,” National Retail Federation (NRF) President and CEO Matthew Shay said in a statement.

NRF Chairman of the Board Stephen I. Sadove said, “Retailers compete for customers on many different levels, distribution channels and fronts, including service and selection, but they cannot compete on sales tax. Congress needs to address this sales tax disparity and allow retailers to compete freely and fairly.”

Fibre2fashion News Desk - India

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