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Senate Passes Online Sales Tax Bill

We're one step closer to mandatory online sales tax collection. Next, the bill moves to the House.

In a vote of 69 to 27 Monday evening, the Senate approved the Marketplace Fairness Act, a bill that would allow states to compel online retailers to collect sales tax.

The bill's success in the Senate follows a nonbinding vote in March in favor of including the online sales tax legislation in the 2014 budget resolution. The new legislation would allow states and local governments to require large Internet retailers and other “remote sellers” with sales over $1 million annually to collect sales taxes and send the revenue to the appropriate location.

“After 20 years, there is finally light at the end of the tunnel for our brick-and-mortar businesses,” Representative Steve Womack, Republican of Arkansas, and the bill’s House sponsor, told the New York Times. “Saving local retail business depends on it, and it’s now up to the House to act.”

The legislation, a repackaged version of a proposal introduced in February, now moves to the House, where doubts linger about its passage. While supporters say the legislation would level the playing field for online versus brick-and-mortar retailers, opponents say the $1 million threshold makes the move unfairly burdensome to small and medium-sized retailers who may not have the resources to comply.

If passed, the legislation would overturn a 1992 Supreme Court decision that forbade companies from collecting sales tax in states where they don’t have a physical presence. 

Last updated: May 7, 2013


Julie Strickland covers start-ups, small businesses, and entrepreneurial endeavors of all kinds for Inc. Her work has been published in Brooklyn Based and City Limits in New York, the Free Times in Columbia, SC, Real Travel Magazine in London, and Daegu Pockets in South Korea. She lives in New York City.

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