News and Insights

Senate Passes Marketplace Fairness Act

Tax Development May 07, 2013

On Monday, May 6, 2013, the Marketplace Fairness Act passed in the United States Senate (Senate Bill 743). If enacted, it will allow states and the District of Columbia to require online retailers to collect sales and use tax without a physical presence nexus requirement. The bill imposes a threshold of one million dollars of business transacted in order for a jurisdiction to require these online retailers to collect sales and use taxes.

The bill has the support of the Obama administration and, at 69-27 in favor of the legislation, passed the Senate with little difficulty. Some representatives in the House, however, are mixed in their support of the bill, with some claiming it merely allows enforcement of existing taxes, while others remain critical of the increased taxes on consumers and the new tax burden on business transacted over the Internet. The House version (House Bill 684) was referred to the Subcommittee on Regulatory Reform, Commercial, and Antitrust Law on April 8, 2013.

Online retailers are also broadly mixed in their reaction to the bill. Certain large retailers already collect sales tax for online transactions; others have voiced concerns that they will face not only the burden of new taxes but also the administrative difficulty of calculating differing tax rates in different jurisdictions.


Jeremiah T. Lynch