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2013 Marketplace Fairness Act Would Require Online Sales Tax

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According to the latest version of the Marketplace Fairness Act, introduced Feb. 14, online sales would be taxed at the same rates those items are taxed in stores. The proposed federal law aims to close the loophole that lets online sellers like Amazon.com avoid charging sales tax in states where they don’t have any physical stores or warehouses.

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"For far too long local retailers and small business owners have been saddled with a competitive disadvantage with online retailers – sales taxes," National Retail Federation’s senior vice president for government relations David French said in a statement. "While store owners collect and remit state and local sales taxes their digital competitors are off the hook – and benefiting because of it."

The Marketplace Fairness Act, which has bipartisan supports, seeks to close the sales tax disparity by granting states the authority to require remote and online sellers to collect sales and use tax at the point of purchase. The bill specifies that states would need to simplify and streamline their sales and use tax definitions and obligations before implementation, and provide sellers with free software to help them comply.

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“This bill grants states the ability to collect taxes that are already owed,” French stated. “The Marketplace Fairness Act reinforces free and fair competition in the marketplace, protects states’ rights, and brings much-needed simplification to the nation’s complex sales tax system."

Groups who oppose the bill, including the WE R HERE coalition of Internet small business retailers, have said the free software would do little to mitigate the impacts if the measure were to pass. The coalition noted the provided sofotware would only cover a fraction of the cost – the impact of data storage, potential audits and employee training should be taken into account.

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