It’s Retailer vs. Retailer in Internet Sales Tax Push

Ann Whitley Wood built her EBay (EBAY) consignment store, Willow-Wear, from a hobby into an $800,000 business during the past dozen years. The former Dallas appellate attorney, who has worked full-time on the venture since 2005, worries proposed federal legislation would saddle her and other Internet sellers with the complex and time-consuming task of collecting state sales taxes.

The Marketplace Fairness Act, and similar legislation that attracted bipartisan support, died in 2012’s extraordinarily unproductive Congress, but Senator Lamar Alexander (R-Tenn.) on Wednesday announced plans to reintroduce it. Boston CPA Sylvia Dion, who has written extensively about Internet sales tax, believes some version of the legislation has a fair chance of passage given the bipartisan support the issue attracts and its growing number of supporters—if Congress is more effective this year.

The legislation is aimed at boosting revenue by allowing states to collect sales tax on all purchases made by residents, including those made online. It has pitted brick-and-mortar retailers small and large, who must collect state sales tax on all purchases, against Web-based companies that only are obliged to collect taxes in states where they have a physical presence, such as a warehouse or sales office.

The long list of supporters includes state governors, who claim they are missing upwards of $20 billion in lost state tax revenue, local mayors, big-box retailers, labor groups, booksellers associations, and the National Retail Federation. Amazon.com (AMZN) was initially opposed but has also become a supporter as it has increased its physical footprint throughout the country. The opposition includes EBay, conservative research groups such as the Heritage Foundation, and e-commerce advocates including NetChoice.

Under U.S. Supreme Court decisions dating to 1967 and 1992, out-of-state retailers have been shielded from state sales tax collection due to concerns about impeding interstate commerce. A handful of states, including California, Illinois, and Georgia, have passed so-called Amazon laws in the past two years, aiming to collect sales tax on purchases made through Internet companies that advertise to their state residents online, says Daniel Wagner, an accountant specializing in state and local tax practice at Kaufman Rossin in Boca Raton, Fla.

Continue reading this Internet Retailer article at Bloomberg Businessweek.