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Senate Fast-Tracks Internet Tax Bill

Washington – The U.S. Senate moved yesterday to limit debate on the Marketplace Fairness Act, clearing the way for a quick vote on the controversial e-commerce tax bill.

The bipartisan measure would compel retailers to collect state and local sales tax on all online transactions, exempting only those businesses with extra-state sales of $1 million or less.

The bill gained the support of the Obama Administration yesterday, with press secretary Jay Carney telling reporters “We believe that the Marketplace Fairness Act will level the playing field for local small business retailers who are undercut every day by out-of state online companies.”

The Consumer Electronics Association (CEA) also lauded the Senate’s fast-track actions. “We applaud Senate leadership for voting to end debate and bring this important legislation to the Senate floor,” president/CEO Gary Shapiro said in a statement. “We urge for swift action and final passage of this common-sense legislation that will end the unequal treatment of brick-and-mortar retailers by allowing states to collect sales tax that is legally owed from online retailers, removing an onerous and unfair burden from consumers.” 

But the conservative Heartland Institute, a public policy think tank, sided with eBay, and other major e-tailers, arguing that forcing merchants to collect sales tax for more than 9,600 state and local tax districts, and taking an estimated $23 billion out of shoppers’ pockets, “will have a detrimental impact on consumers, small businesses, and Internet commerce as a whole.”

A bipartisan group of seven senators including Florida Republican Marco Rubio also lambasted the bill, calling the compliance costs “crippling” for small e-commerce businesses. “These costs include not only those associated with the new collection and remittance requirements, but these small businesses will also be on the hook for expensive audits and legal bills if there are any errors in the thousands of tax calculations and distributions they must make every day,” the group said.

The senators said the bill would also undermine the Supreme Court’s so-called “nexus” decision that restricts states from taxing merchants that have no physical presence within their borders.