House to Debate Internet Sales Tax Bill

February 28, 2014  |  What Sells

The so-called Marketplace Fairness Act will be discussed in the House of Representatives on Tuesday, March 4th.  After the Senate failed to follow regular legislative procedure before passing the bill last spring, House leadership publicly announced that Internet sales tax legislation would not be brought to the House floor before being fully vetted by the House Judiciary Committee.  Committee Chairman Robert Goodlatte (R-VA) is expected to hold at least one hearing on the Internet sales tax bill in the first half of the year – the first on Tuesday, March 4th.  This will be the first hearing in the House of Representatives on the Internet sales tax issue in the 113th Congress.

Chairman Goodlatte is no stranger to the issue of sales taxes on the Internet. In September, Chairman Goodlatte released a set of seven principles that any Internet sales tax proposal must meet in order to pass his committee. The principles – which include technology neutrality, promotion of interstate tax competition, and no regulation without representation – are intended to guide debate in the House as Members of Congress work to address the issue without negatively impacting small online businesses.

The Marketplace Fairness Act, as passed by the Senate, would force small businesses to collect and remit sales taxes for as many as 9,600 different jurisdictions and allow any state to impose their sales tax laws on any business, even if the business has no presence or connection in that state. This would place a huge burden on small businesses all across the country and leave them vulnerable to out-of-state audits and potentially even court action. Although the bill contains a “small seller exemption,” it would only protect sellers with less than $1 million in total remote sales, which is an unfounded threshold according to economist, John Orszag.  Other organizations, like the National Association of Letter Carriers and the American Institute of CPAs, have also raised concerns about the impact of the artificial small business definition in the Marketplace Fairness Act.

eBay Inc. believes that Internet sales tax legislation must be fair to Internet-enabled businesses and to offline businesses so that they can one day use the Internet to reach new consumers.  As attention turns to the House, eBay is working to ensure that an Internet sales tax bill treats small businesses fairly and does not jeopardize their growth, the jobs they support, or the benefits they provide their local communities.

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