The U.S. Senate voted today to pass a bill that would require large e-commerce companies to collect sales taxes from all of their U.S. customers.
The bill, known as the Marketplace Fairness Act of 2013 (S. 743), passed the Senate by a vote of 69 to 27 (with 4 Senators not voting).
It now goes to the House of Representatives, where it may face a tougher battle.
The bill imposes a single federal standard requiring all retailers with more than $1 million in online transactions to collect the sales tax required by whatever locality the buyer happens to be in. States would have to do their part by setting up a single entity for sales tax collection and providing a single sales tax return form for retailers to use in reporting tax payments, greatly simplifying the process.
We’ve been expecting this bill to pass for awhile.
So the bill is mixed news for e-commerce fans. For customers, that means they’ll have to pay sales tax even if they didn’t before. For online retailers, it means they’ll have to collect sales taxes for a variety of jurisdictions — but the process will be simpler.
Right now, there’s a patchwork of different state and local laws governing e-commerce. Technically, e-retailers are supposed to collect sales tax in many locations. In reality, not many do: In California, only 1.4 percent of online transactions included the required sales tax.
Some online retailers, such as eBay, have stridently opposed the bill, while others, such as Amazon, are in favor. (Amazon earlier fought, and lost, a battle to keep from collecting sales tax from its California customers.)
Brick-and-mortar retailers supported the bill, viewing it as a way to cut down on “showrooming,” where customers visit physical showrooms to check out the latest products, then go online to purchase them at lower prices. The U.S. governor’s association also supported the bill.
CNN has a handy overview of the bill’s main points and what it will mean for you.
Here’s the full text of S. 743.
Corrected 6:06pm: The bill goes next to the House, not to the President.
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