No Resolution on Internet Sales Tax Bill

The 113th Congress adjourned in December 2014 without passing the Marketplace Fairness Act of 2013 (MFA), which was passed by the Senate in 2013 but was stalled in the House.  Lawmakers will seek to introduce a new version of the bill in 2015.

The percentage of retail sales being conducted online continues to grow at a rapid pace.  Five years ago, internet sales accounted for approximately 4% of total retail sales.  Today, that figure stands at just under 7% and will continue to rise. 

Presently, bricks-and-mortar retailers in 45 states are required by law to collect tax on nearly all of their sales.  The same applies to internet retailers when selling to customers within their own states.  However, these internet retailers are not required to collect sales tax in states where they do not have a physical presence.  The National Conference of State Legislatures estimates that nearly $25 billion in sales taxes go uncollected each year based on these out-of-state internet sales.

Advocates for the traditional retailers believe the current laws put the bricks-and-mortar shops at a competitive disadvantage.  They believe many consumers come into their stores to look at and touch the merchandise, but then order online to avoid paying a sales tax.

With Congress’ session officially ending on January 3, 2015, the MFA has effectively been put to rest and lawmakers of the 114th Congress will need to begin anew in 2015. 

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This advice is not intended or written to be used for, and it cannot be used for, the purpose of avoiding any federal tax penalties that may be imposed, or for promoting, marketing or recommending to another person, any tax related matter.

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