National Jeweler Network

Public Policy & Issues

Senate passes Internet sales tax bill

2013-05-07

Washington--The U.S. Senate voted 69 to 27 Monday in favor of a bill that gives states the option to require the collection of sales and use taxes already owed under state law by out-of-state online retailers.

Introduced by Sens. Dick Durbin, D.-Ill. and Mike Enzi, R-Wyo., The Marketplace Fairness Act of 2013 would force online sellers that generate $1 million or more a year in revenue to collect sales taxes in 45 states plus the District of Columbia. The five states excluded are Alaska, Delaware, New Hampshire, Oregon and Montana because they do not have sales tax.

As it stands now, online retailers are required only to collect sales tax in states where they have physical presence, such as an office or distribution center. States must rely upon consumers to report and pay sales tax on online purchases with their state taxes.

Proponents of the bill have argued this this puts brick-and-mortar retailers at a disadvantage; this is especially true in the jewelry industry, where consumers often make high-dollar purchases and can save thousands by buying online and avoiding sales tax. Jewelers of America is among those in favor of the bill and gives retailers the option to reach out to their legislators and express their support for the bill via an online form.

“I’ve often listened to speeches in the House and Senate about how we need to do more to make certain that small businesses--the true job creators--can succeed,” Durbin said following the bill’s passage. “A solid majority of the Senate stood up for small business today. I think the support in the House will be similar if the leadership practices what they preach and calls this bill for a vote.”

The bill received support from both Republicans and Democrats in the Senate. It next heads to the House of Representatives, where it faces a stiffer challenge due to opposition from conservatives who view it as a tax increase, according to news reports.

A tally showing how each senator voted on the bill can be found on Senate.gov.

The complete text of the bill is available on MarketplaceFairness.org.