For Now, Passage of Marketplace Fairness Act of 2013 Unlikely

For Now, Passage of Marketplace Fairness Act of 2013 Unlikely

Last month, it was reported that the British Exchequer Secretary to the Treasury had privately communicated to the heads of six British online retailers that the British government would not seek a new online sales tax. [Stephanie Soong Johnston, "U.K. Rules Out Possibility of Online Sales Tax After E-Commerce Outcry,", taxanalysts® Worldwide Tax Daily (August 22, 2013)]. The Secretary’s communication to the heads of the British online retailers followed the publication in the media of a letter from the CEOs articulating their opposition to a new online sales tax. [Stephanie Soong Johnston, , "U.K. Rules Out Possibility of Online Sales Tax After E-Commerce Outcry,", taxanalysts® Worldwide Tax Daily (August 22, 2013].

Meanwhile, here in the U.S., the future of The Marketplace Fairness Act of 2013, which proponents argue will help level the state tax landscape for remote online retailers and “brick-and-mortar” retailers, appears for now to be uncertain. [See “Chance of House Passage of Marketplace Fairness Act Declining”, "Chance of House Passage of Marketplace Fairness Act Declining," taxanalysts® Tax Notes Today (June 27, 2013)]. As noted in a June article in Tax Analysts’ Tax Notes Today, the Senate version of the bill, S.B. 743, passed with bipartisan support but the House version of the bill, H.B. 684, has been sidelined and will likely not be considered again until next year. [See "Chance of House Passage of Marketplace Fairness Act Declining," taxanalysts® Tax Notes Today (June 27, 2013)]. 

Under the House bill, each state that is a member of the Streamlined Sales and Use Tax Agreement (SSUTA) will have the authority to require all sellers (except those sellers that qualify under the small seller exception under the Act) “to collect and remit sales and use taxes with respect to remote sales sourced to that Member State” pursuant to the provisions of the [SSUTA], but only if the SSUTA includes certain minimum simplification requirements outlined in the Act. [See 2013 H.R. 684].

The House bill further provides: “A State may exercise authority under this Act beginning 90 days after the State publishes notice of the State's intent to exercise the authority under this Act, but no earlier than the first day of the calendar quarter that is at least 90 days after the date of the enactment of this Act.” [See 2013 H.R. 684].

With respect to a state that is not a member of the SSUTA, the House bill provides that such state will be authorized “notwithstanding any other provision of law to require all sellers not qualifying for the small seller exception . . . to collect and remit sales and use taxes with respect to remote sales sourced to that State, but only if the State adopts and implements the minimum simplification requirements” set forth in the Act. [See 2013 H.R. 684]. In addition, the House bill sets forth provisions dictating when such authority to collect and remit sales and use taxes with respect to remote sales will commence. [See 2013 H.R. 684].

The Senate bill’s provisions are essentially the same, [See 2013 S. 743], and as noted above, the Senate bill passed with support from both Republicans and Democrats. In fact, the Senate bill passed with an impressive 69 Yea to 27 Nay vote. [See “Bill Summary & Status, 113th Congress (2013-2014), S. 743” on The Library of Congress site at http://thomas.loc.gov/cgi-bin/bdquery/D?d113:3:./temp/~bddgrR::|/home/LegislativeData.php|].

With respect to the House, the bill has been referred to the Subcommittee on Regulatory Reform, Commercial and Antitrust Law. [See “Bill Summary & Status, 113th Congress (2013-2014), H.r. 684, All Congressional Actions” at http://thomas.loc.gov/cgi-bin/bdquery/D?d113:1:./temp/~bddgrR::|/home/LegislativeData.php|], and as noted in the Tax Analysts’ article, the possibility exists that the Act could be attached to other legislation. [See "Chance of House Passage of Marketplace Fairness Act Declining," taxanalysts® Tax Notes Today (June 27, 2013).] However, with critical national security issues being considered by Congress, specifically the current debate over potential military action in Syria and the debate that will follow if such action is indeed taken, it seems unlikely that significant tax legislation, such as The Marketplace Fairness Act, will be considered by Congress in the near future.

RELATED LINKS: To view the Senate and House bills on Lexis.com, see:

For more information on the state taxation of online sales by out-of-state retailers, with a focus on the state taxation of digital content and cloud services, please see the Lexis® State Tax Guide on Digital Content & Cloud Services, authored by Carolynn Iafrate Kranz.

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