Pending Federal Sales Tax Law Could Impact Online Retailers

Anne Garcia - May 17, 2013

A new measure called the Marketplace Fairness Act is currently pending passage by the House of Representatives. It would impact the way many online retailers operate because it would mandate sales tax collection by all retailers that do at least $1 million in sales, where they don’t have a physical presence like stores or distribution centers.

The U.S. Senate recently passed this sales tax legislation in an effort to increase the number of retailers collecting sales tax for online purchases. Many proponents of the Marketplace Fairness Act say that this new legislation will create a more fair marketplace for businesses to compete across both online and offline channels. Conversely, this will leave many retailers with a task of collecting different tax rates across the country as well as integrating with their online shopping carts and accounting processes as many online stores only collect tax in states that they have brick and mortar stores or distribution centers.

We will keep you posted on the status of the pending passage of the Marketplace Fairness Act.