Congress is considering legislation that would authorize states to require that online businesses collect sales taxes. The U.S. Senate voted 69-27 in favor of the Marketplace Fairness Act. The House of Representatives has its own version of the bill, but it has not been scheduled for a hearing or a vote, according to State Budget Solutions, an Alexandria, Va.-based nonprofit that does not support the measure.
Online businesses that don’t have a physical presence in a state currently don’t have to collect taxes from customers. The bill would allow states to collect sales taxes on purchases made online anywhere in the country from companies that have at least $1 million in annual gross receipts within the state.
Before New York could implement such a law, the state government, counties and cities would have to agree on what’s subject to sales tax. The state, New York City and several other counties don’t tax clothing and footwear sales under $110, but most counties and cities do. New York currently has an “Amazon tax,” which applies to some ecommerce retailers, such as Amazon.com and Zappos.
“The Retail Council of New York State supports the measure. “The notion of fairness is what shines more brightly to us than the potential revenue to the state,” Ted Potrikus, executive vice president of the council, recently told Gannett’s Washington Bureau. “You’ve got small bookstores and small everything stores — those that are left — that are competing with out-of-state retailers who don’t have to charge sales tax.”
Jonathan Johnson, an Overstock.com executive, recently told Gannett’s Washington Bureau that his company “is not a big fan” of the congressional legislation because it would allow states such as New York to maintain their own versions of an Internet tax instead of creating a uniform national system.