Online Retailers Have Different Takes on 'Marketplace Fairness Act'

November 10, 2011 -

Major online retailers are divided over a new legislation called The Marketplace Fairness Act that seeks to tackle the issue of charging sales tax for purchases made online. Right now states only require customers to pay a sales tax on purchases made online if the online retailer has a physical store address in the state. The problem for states that want to collect those revenues is that most online retailers like Amazon only have shipping or service centers in-state. Traditional brick and mortar retailers have long complained that online have an unfair advantage because of this fact.

The Marketplace Fairness Act hopes to change that. It was introduced Wednesday by U.S. Senators Lamar Alexander (R-Tenn.), Dick Durbin (D-Ill.) and Michael Enzi (R-Wyo.). If the bill passes it would give state governments several ways to collect sales taxes from online purchases. The first method would require states to sign a multi-state legal agreement that would bring each of their sales tax codes into conformity. States would then have the power to compel online retailers to charge or remit a sales tax. States that don’t sign the legal agreement can still make online retailers collect sales tax on purchased goods if they adopt minimum standards to simplify their collection process. All sellers with annual sales that total less than $500,000 a year would be exempt from collecting individual state sales taxes.

While Amazon has come out in support of the Marketplace Fairness Act, companies such as eBay have come out against the new legislation. EBay feels that it has nothing to gain from the bill since the majority of its money comes from fees it charges other sellers for using its online auction site. Depending on the state, the individual selling the product(s) is usually responsible for collecting sales tax from customers. While eBay does have its own retail business, it doesn’t have the agreements with states to waive sale taxes like Amazon has managed to negotiate.

We'll continue to follow the progress of this bill and let you know if it passes or falls by the wayside.

Source: VentureBeat


Comments

Re: Online Retailers Have Different Takes on 'Marketplace ...

Buying from a store I pay sales tax.  Buying online I pay shipping costs.  I see that as balanced.  If the law goes into effect then buying online I would have to pay sales tax and shipping costs.  It doesn't balance anything; it shifts the advantage to local stores.  The stores don't want fairness, they want dominance.  I get it, I don't begrudge them wanting to make money, but they aren't being honest about it. 

Re: Online Retailers Have Different Takes on 'Marketplace ...

You still pay for shipping at brick and mortar stores, it is simply bundled into the price of the item rather then broken out to make things look cheaper.

Re: Online Retailers Have Different Takes on 'Marketplace ...

Online you pay for:
 - "Product + Warehouse_area + Shipping + Tax"

In a Brick&Mortar store you pay for:
 - "Product + Store_area + Tax"

The cost for store_area and sales-people are so much greater for a "Brick & Mortar" store that they have no chance what-so-ever to compete with an online store. Even if they are taxed the same and you have to pay for shipping, products often end up being 20-40% cheaper online.

Though, you are right in that stores want dominance, which is why B&M stores blackmail publishers into raising online-prices for games by ridiculous amounts.

Stores that has no online-section, is a dying concept and trying to keep them alive is futile for they have no place in this day & age. They are obsolete.

Re: Online Retailers Have Different Takes on 'Marketplace ...

While this might feel true to gadget heads and computer people, keep in mind the majority of the US population still shops B&M, and a lot of people do zero shopping online.

They are only obsolete if one only cares about thier own demographic.

Re: Online Retailers Have Different Takes on 'Marketplace ...

Good points to all.

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