Last week there was a lot of airtime devoted to the “marketplace fairness act” on just about every news / talk station that I listen to. For those of you that are out of the loop, the “marketplace fairness act” is basically an internet sales tax, and last week it passed the senate and has been sent to the house of representatives for their approval (which seems a little unlikely). I’m somewhat torn on this particular piece of legislation because I can see it’s purpose in leveling the playing field between “brick and mortar” businesses and those with a web-only business. For years now online retailers have held some advantages over mom & pop / brick-n-mortar retailers such as lower operating costs / overhead, 24/7 availability to the consumer, and no sales tax. I can see where these advantages could hurt traditional retailers when consumers do comparison shopping. Hopefully, all of the mom & pop retailers have their own websites as well so they can somewhat level the playing field – although I know many still do not.
From the online retailer perspective, it is my understanding that only retailers grossing over $1 million dollars are required to collect the tax. Smaller online vendors say having to charge sales tax would make them less competitive, because they would have to raise their prices to cover the administrative costs of collecting and remitting taxes. Let’s face it, if this piece of legislation passes, there will be a hard line in the sand for online retailers as to what they can make and remain profitable. If it becomes law, the Marketplace Fairness Act would reverse a 1992 U.S. Supreme Court decision that forbids states from collecting taxes on catalog or Internet sales from sellers outside their borders, according to an article in USA Today.
Just curious, what are your thoughts on the Internet Sales Tax?