Marketplace Fairness: Online Sales Tax Legislation Reintroduced
The Marketplace Fairness Act is proposed legislation pending in the United States Congress that would enable state governments to collect sales taxes and use taxes from remote retailers with no physical presence in their state. Identical versions were introduced into both the House and the Senate during the 113th United States Congress, but expired without enactment.
In April, 2017, legislation was reintroduced: S.976 The Marketplace Fairness Act and H.R. 2193 The Remote Transactions Parity Act. The Marketplace Fairness Coalition, of which NAMM is a member, released the following statement: “The reintroduction of bipartisan and bicameral E-Fairness legislation is an important step in the right direction to help American businesses and workers thrive and grow. For too long, congressional inaction has created an outdated, pre-internet online sales tax loophole that hurts Main Street job creators. Communities across America are forced to live with crumbling infrastructure and cannot hire teachers and first responders thanks to the lost revenue resulting from this loophole. It's time for Congress to bring our tax system into the 21st Century and pass federal E-Fairness legislation immediately."
Presently, each state in the U.S. may impose a sales tax on products or services sold in that state. Most states impose a sales tax, some states do not; and each state may set the rate and scope (products taxed) of the sales tax. Within each state, counties and cities may have different sales tax rates and scope, resulting in many different rates based on the location of the point of sale. Generally, the states allow (or require) the seller to itemize and collect the tax from their customers at the time of purchase. Most jurisdictions hold sellers responsible for the tax even when it is not collected at the time of purchase.
According to a study by the National Council of State Legislatures (NCSL) and International Council of Shopping Centers (ICSC), states currently lose an estimated $26 billion annually to the online sales tax loophole. Uncollected Sales & Use Tax from Remote Sales: Revised Figures Here.