Bill would close Internet tax loophole

A bipartisan group of U.S. senators and representatives introduced the Marketplace Fairness Act of 2013 on Feb. 14. The bill, an attempt to remedy a tax loophole and help brick-and-mortar retailers compete more effectively against out-of-state Internet merchants, resolves differences in legislation previously introduced in the U.S. House and Senate.

The legislators pointed out it is an inherent unfairness that brick-and-mortar businesses must collect sales and use taxes from customers while many online and catalog retailers do not. The Marketplace Fairness Act of 2013 would allow states to require out-of-state sellers to pay sales and use taxes. States must simplify their sales and use tax systems to do so.

One bill sponsor, Sen. Mike Enzi, R-Wyo., said on the bill's introduction, "For over a decade, congressional inaction has created one of the largest tax loopholes of our lifetime. The federal government should not favor some businesses over other businesses and some taxpayers over other taxpayers. It's time to stop discriminating through the tax code and put local and Main Street retailers on a level playing field with their out-of-state and online counterparts."

Sen. Lamar Alexander, R-Tenn., added, "This is an 11-page bill about a two-word issue: states' rights. States have a right to decide what taxes to impose and whether they're going to collect those taxes from some or all the people who owe them, and whether they're going to subsidize some businesses at the expense of others."

Rep. Jackie Speier, D-Calif., also commented. "As a result of an outdated Supreme Court ruling that hasn't kept up with modern technology and the 21st century marketplace, our local brick-and-mortar retailers are struggling to stay afloat," she said. "With the MFA, my colleagues and I have found a way to level the playing field for all retailers while still protecting small online retailers."

A copy of the bill can be found here: www.enzi.senate.gov/public/index.cfm/files/serve?File_id=5c361440-337e-4ddb-ab4d-9c5d871eb589 .

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