The Marketplace Fairness Act has shown strong popularity as it sped through the Senate with a 69-27 vote. According to CCH Tax Legislation Update, the bill would allow a state to require certain remote sellers to collect sales and use tax on sales made to customers in the state. Although this bill seems to be the downfall of the online- selling- tax- avoiding trend many Americans have taken advantage of, there are other parts of this bill that attempt to create an even playing field between online sales and physical retail stores while simultaneously building revenue at the state level.
The bill creates a taxing division between states. States that declare themselves a member of the Streamlined Sales and Use Tax Agreement (SST) automatically require remote sellers to comply with the laws presented in the Marketplace Fairness Act while other states not declaring membership are required to comply with simplified requirements to maintain some sense of taxing equality on a national level.
What this means for the individual and everyday online purchases…
If you are on avid online shopper, you have most likely already noticed major retailers require a sales tax payment upon purchase of goods and you will not be hit with any additional tax in the near future. If you are more of an online shopper looking for a unique or personal gift from a small or medium sized company, you may begin to see a shift in prices as sales taxes come into the picture for more online retailers. Although the Marketplace Fairness Act does include an exception for online retailers with less than $1 million in remote sales a year, states are still hoping to collect on closing another loophole found within the sales and use tax system. The National Conference of State Legislators estimated nearly $23 billion in uncollected sales tax at the state level in 2012. The act goes to the House of Representatives for the next round of votes. Along with the additional revenue, the new law will also create more monitoring, auditing and oversight responsibilities for state employees and officials. The Marketplace Fairness Act could eventually encourage further action on a state level, but only time will tell if the bill passes and proves to be successful at collection of these unseen tax dollars.