eBay and Overstock are Fighting to Keep Internet Sales Free From Taxes

by Director of Intergalactic Communications and Marketing on December 1, 2011

eBay and Overstock.com are working Congress to prevent a new law that would require sales tax be collected for online purchases from large retailers.

Currently, online shoppers only pay sales tax on items purchased from a seller in the same state.

But a new proposed law, the Marketplace Equity Act of 2011 (or the Marketplace Fairness Act in the Senate), would allows states to collect sales tax from any buyer “without regard to the location of the seller.”

The tax would be waived for “small sellers,” which the bill defines as sellers with revenues less than $1 million annually.

The act has bipartisan support and is currently sponsored by 15 members of the House of Representatives.

“The nation’s retailers—both big and small—deserve to compete on a level playing field, and our bill provides the framework by which states can have the authority to compel remote sellers on the Internet to remit taxes due on purchases made online,”

“The exemption for small E-tailers will ensure that online start ups and small sellers will not face the same compliance requirements that are easily adopted by large online retailers.”

said Rep. Steve Womack (R-AR) in a statement.

Amazon.com, however, supports the act.

eBay general counsel Todd Cohen told Cnet the company would support a sales tax bill with a much broader exception for small sellers. He also gave data that showed a year-over-year decline in small online retail businesses (those with less than $10 million in annual revenue) even as entities such as Amazon.com and established real-world retailers with an online presence grew.

Sears, with their bricks and mortar storefronts of Sears, K-mart, and Lands End required to collect sales taxes supports passage of the legislation.

A spokesperson for Sears stated,

“This bill will level the sales tax collection playing field for all retailers… Although many customers don’t realize it, under current law, they have an obligation to pay taxes on all purchases. Most retailers calculate and collect the tax at the point of sale, as required by law. However, online-only merchants currently do not have to collect the tax broadly, leaving the customer with the responsibility of saving receipts and filing and paying use taxes for those purchases on their state income tax returns. This bill closes a loophole that has given a significant and unfair competitive advantage to a handful of online-only retailers, while hurting those that create jobs and invest in local communities.”


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