Marketplace Fairness Act progresses to Senate debate

by Chuck April 26, 2013

Marketplace Fairness Act progresses

Marketplace Fairness Act progresses

Marketplace Fairness Act Updates

This month the United States took a big step toward throwing out the concept of nexus. On April 22nd, the Senate voted 74-20 to bring the Marketplace Fairness Act (S.743) to the floor for debate. This is significant progress as bills typically need at least 60 votes to clear this procedural hurdle.

The Senate titled this measure “A bill to restore States’ sovereign rights to enforce State and local sales and use tax laws, and for other purposes.”

If the Marketplace Fairness Act passes as it is written now, online vendors would need to collect sales taxes for the state and local governments of its U.S. buyers, wherever they may be. Businesses that have less than $1 million worth of out-of-state sales would be exempt from this requirement. States would then agree to provide assistance to help each online retailer calculate the tax liability.

The White House announced that President Obama supports the passing of this bill as he believes it will help states raise needed revenues while also creating a more fair playing field for brick and mortar businesses, which often complain that online businesses have an unfair tax advantage.

Major online retailers Amazon and eBay are divided on this bill. eBay is strongly against it and has been asking its supporters to contact their government representatives about the issue. eBay representatives contend that this bill would create a huge burden for online retailers and would make it very different for small businesses to function online.

Bill opponents point out that there are so many different tax situations across the country, online retailers could be stuck having to keep track of potentially thousands of different scenarios. eBay proposes that the exemption be increased from $1 million to no less than $10 million in annual out-of-state sales.

Amazon, the largest online retailer, supports the bill’s passage. This is partly because Amazon already collects sales taxes in many states because it has lost multiple court battles which found its’ order fulfillment centers to have meet the standards for creation of nexus.. Amazon stands to benefit from the potential standardization of sales tax regulations.

This bill still needs to pass votes in the Senate and the House of Representatives before it becomes law. However, Monday’s procedural vote puts the Marketplace Fairness Act one step closer to becoming a reality.

Follow the bill’s progress at


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