Internet Sales Tax Bill Passes Senate, House Expected to Challenge It
May 7, 2013 2:31 PM
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House Speaker John Boehner now plans to deliver the bill to the House Judiciary Committee
The Internet sales tax bill
passed with flying colors in the Senate
, but the House of Representatives may prove to be more of an obstacle.
The Senate voted 69-27 in favor of the Internet sales tax bill (also known as the Marketplace Fairness Act) on Monday. The Marketplace Fairness Act would allow states to force out-of-state retailers to collect sales tax on Internet purchases -- even if the e-tailer has no physical presence in that buyer's state.
The legislation offers an exemption for merchants that generate less than $1 million in annual out-of-state revenue.
However, many e-tailers like eBay and Overstock.com oppose the new bill, saying that it would hurt small businesses.
Those who are onboard with the legislation include Amazon, which is looking to simplify its U.S. state sales tax payments, and brick-and-mortar stores like Wal-Mart and Best Buy, which have complained about the unfair advantage online retailers have when it comes to the lack of sales tax collection in certain states.
Also, state government's in need of extra revenue like the idea of the new bill. The California Board of Equalization, for instance, 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.
Back in April, the Marketplace Fairness Act scored a big victory in a procedural vote of 74-20 in the Senate. It even won backing from U.S. President Barack Obama.
While the Marketplace Fairness Act has had an easy time in the Senate, things are expected to change in the House of Representatives. The issue is that Republicans control the House, and they refuse to consider new federal revenue from eliminating tax breaks (which would be part of tax reform).
House Speaker John Boehner now plans to deliver the bill to the House Judiciary Committee.
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RE: More misinformation
5/8/2013 7:33:59 PM
Also, a lot of official accessories were only available by phone or mail-order from the manufacturer for many devices. In particular, I recall Nintendo putting a list of all the ohm adapters and S-VHS cables in the 1991 Super Nintendo Entertainment System manual and you would call 1-800-355-3700 to order. Even in the age of the Internet, factory direct was the only way to go for replacement battery doors (Gameboy), official component cables (Gamecube), and headphone adapters (Gameboy Advance SP), so I called that number a lot over the years. I even ordered a few items that were back-ordered at retail (Broadband Adapter).
With these changes and today's digital software delivery and (usually) ubiquitous Internet access, many manufacturers are going to turn their product offerings into services, which are usually excluded from sales tax (sorry, Hawaii). Amazon will sell you the Playstation 4 and then you will start ordering all the games from Sony online. Microsoft will discourage retail copies of Microsoft Office and start selling subscriptions like Adobe Creative Cloud (no more boxed Photoshop/Creative Suite). It's going to have repercussions that hurt brick and mortar retailers more than they know. Soon, electronics retailers will be worse than "Amazon's showroom" when the manufacturers start using them just to get a foot in your living room and the exclude them from the future profit the initial sale was promising (software and accessories).
At one time, all those TV commercials for soon-to-be "As Seen on TV" products would tell you to include X amount for tax in a particular state. Now they tell you to go online or call. The way this bill is being reported as if it only affects Internet sales, they'd simply push the phone and mail options as alternatives. Too bad that's not the case. The misreporting is hiding the true impact. You'd better believe that Turbo Tax will shift further away from the old boxed-product to a service and you'd better believe that expensive video games and movies are going to be delivered more and more often as a service.
"Paying an extra $500 for a computer in this environment -- same piece of hardware -- paying $500 more to get a logo on it? I think that's a more challenging proposition for the average person than it used to be." -- Steve Ballmer
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