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It even won backing from U.S. President Barack Obama

Legislation for the collection of online sales taxes took a major step forward in a Senate vote Monday evening. 

The legislation -- known as the Marketplace Fairness Act -- scored a big victory in a procedural vote of 74-20 Monday night. It even won backing from U.S. President Barack Obama. 

The Marketplace Fairness Act allows states to force out-of-state retailers to collect online sales taxes. Currently, states can only require merchants within their borders to collect sales taxes.

The legislation offers an exemption for merchants that generate less than $1 million in annual out-of-state revenue.

"It will level the playing field for local small business retailers who are undercut every day by out-of-state on-line companies," said Jay Carney, White House spokesman. 

Senate Majority Leader Harry Reid filed a motion in support of the new bill last Thursday. 

Many states are in favor of the Marketplace Fairness Act because the money from sales tax collection could help with financial deficits. For instance, the California Board of Equalization said it made $96.4 million in sales tax on internet commerce from September-December 2012, which is the first full quarter that the state started collecting.

Brick-and-mortar stores are also happy with the legislation, since stores like Wal-Mart and Best Buy have complained about the unfair advantage online retailers like Amazon have when it comes to the lack of sales tax collection in certain states. 

However, not everyone is in favor of the Marketplace Fairness Act. Sen. Kelly Ayotte (R-NH) strongly opposes the legislation, and plans to fight it until the end. 

"This is big retailers and big business lining up to put burdens on the Internet for small online business," said Ayotte. "It is so wrong and it is a precursor to other things they will try to grab using the Internet, including taxing the Internet."

Amazon CEO Jeff Bezos has said that he would comply with sales tax collection if there were some sort of federal legislation regarding the topic. It has been fighting U.S. states that force it to collect sales tax for years (except in Kansas, Kentucky, New York, North Dakota and Washington). Only recently has it started collecting in additional states (like Texas and New Jersey, for example). But in return, Amazon gets to create more distribution centers within these state's borders. 

Source: The New York Times

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How long until?
By SublimeSimplicity on 4/23/2013 8:32:46 AM , Rating: 3
How long will it take the big online retailers (amazon, newegg, etc) to move to Mexico or Canada to avoid this tax?

RE: How long until?
By OoklaTheMok on 4/23/2013 9:01:09 AM , Rating: 2
Obviously because shipping costs would be less than the taxes that would be collected... I don't think you really thought that one through.

RE: How long until?
By SublimeSimplicity on 4/23/2013 9:17:25 AM , Rating: 2
I'm sure shipping companies, who make a good percentage of their income from e-retailers, wouldn't be consulted on the new location.

RE: How long until?
By OoklaTheMok on 4/23/2013 9:25:43 AM , Rating: 2
So you really think that there is a "magical" border location that would somehow negate the costs and burdens of shipping large volumes of goods over the border? Where do you think such a place would exist?

RE: How long until?
By xti on 4/23/2013 10:22:44 AM , Rating: 2
yeah, not sure how a international headquarters address would work with local hubs doing the distribution.

but if you had to pay an office in canada?

RE: How long until?
By Digimonkey on 4/23/2013 9:03:14 AM , Rating: 2
That's very unlikely. Fast and cheap shipping is one of the most important things in the e-retailer business. The first one to move out the country would face a serious decline in sales.

RE: How long until?
By tayb on 4/23/2013 10:18:41 AM , Rating: 2
This is a tax on customers, not corporations.

RE: How long until?
By Spookster on 4/23/2013 5:53:37 PM , Rating: 2
That is true however the tax is only required if the company is based in the U.S.

"We are going to continue to work with them to make sure they understand the reality of the Internet.  A lot of these people don't have Ph.Ds, and they don't have a degree in computer science." -- RIM co-CEO Michael Lazaridis

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