U.S. Senate Shows Support for Online Sales Tax Bill

Marketplace Fairness Act Would Impact TIA Members that Conduct Online Sales

May 7, 2013 | In a vote of 69-27 yesterday, the U.S. Senate passed the Marketplace Fairness Act of 2013 (S.743), legislation that would give states the authority to collect sales tax from out-of-state online retailers. If passed by the House of Representatives and signed into public law, the legislation would impact not only retailers, but also any company that has its own online retail operation doing more than $1 million in annual sales.

The Marketplace Fairness Act would require remote retailers and sellers to calculate and add sales tax to their web orders at the time of purchase. At present time, retailers are only required to collect sales tax in states where they have a physical presence. Supporters of the bill argue that the Marketplace Fairness Act would level the playing field between online and brick-and-mortar retailers / small businesses, which are currently at a competitive disadvantage because they must collect sales taxes from their customers.

Toy Industry Association (TIA) member companies that would not qualify for a “Small Seller Exception” (e.g., volume under $1 million annually) would be affected.

“If enacted into law, sales tax collection will be required on all sales shipped to the 22 states that are full members of the
Streamlined Sales and Use Tax Agreement (SSUTA),” stated Andrew Hackman, TIA vice president of government affairs. “This could potentially have a significant impact on TIA retail members or manufacturers that conduct their own online sales operations.”

The Marketplace Fairness Act projects $23 billion in annual online tax revenue for states if enacted. Alaska, Delaware, Montana, New Hampshire and Oregon are the only states without sales taxes.

TIA staff will continue updating members on developments related to this legislation and will, if needed, provide resources that would assist the Association’s retail and company members with implementation. Questions may be directed to
Rachel Hedge, TIA director of federal government affairs (202.459.0351).