The Senate votes in favor of the Internet sales tax bill

by: Andrew GrushMay 8, 2013


Raise your hands if you love paying sales tax. Probably not too many hands up. Unfortunately, that’s just part of life, that is unless you shop online.

Currently, many online shops in the United States don’t require you to pay sales tax. This is about to change, at least if the Marketplace Fairness Act makes its way into law.

What’s the Marketplace Fairness Act (MFA)? It is a bill that aims to ensure that online retailers charge sales tax to all their customers, regardless of the state the business is operated out of, or the state that the goods are being shipped to.

Under the guidelines of the bill, this would only apply to those business that make more than $1 million in annual out-of-state sales.

According to its proponents, the bill is not about creating new taxes, as most states already require you to pay a “use tax” for online goods, even when sales tax isn’t collected online. The problem is that few people actually pay the use tax, and there is currently little way to enforce it.

The MFA has already made it through the senate, with a vote of 69-to-27. Now the bill will be passed to the House of Representatives, where it will also need to be approved.

If the bill is passed into law, how will it affect consumers?

Right now, if you go online to buy an item, you don’t have to worry about tax. The exception to that rule is if the business you are buying from has a brick-and-mortar retail location, or warehouse in the state you live in.

If the “Marketplace Fairness Act” goes into affect, any goods you buy online will require you to pay the sales tax rate for the state you live in. What about digital purchases, like music, movies and apps? The answer to that seems to vary, depending on who you ask.

Cnet recently wrote an article indicating that “any business of a reasonable size selling digital goods to the 24 states that have decided to tax them must collect sales taxes.”

What makes the issue even fuzzier is that the Bill’s sponsor, Senator Mike Enzi, says this isn’t the case:

Under the Marketplace Fairness Act, states would be able to apply the same sales tax collected locally to the same product sold online, out-of-state, or through a catalogue. A hammer sold online would be charged the same sales tax as it would be in-store. Since there is no digital good that can be purchased locally, the sales tax would not apply. The Marketplace Fairness Act does not affect the taxability of goods, digital or otherwise. It deals with collection of sales tax already owed under state law.

Of course books are sold both in digital and physical formats, as are music and movies, adding further confusion to the bill in its current form. Either way, if the MFA does end up extending into the realm of digital, it would only affect customers in the 24 states that currently consider digital goods taxable.

Now it is up to the House

For those that oppose the new bill, it isn’t over yet.

The House of Representatives is believed to have a much more mixed opinion of the Marketplace Fairness Act, and opponents of the bill will likely do their best to ensure that the House votes against it. If it does make it through? Then it goes to the President to be signed into law.

Considering that President Obama has already expressed support of the MFA, it pretty much means that the house has the final say.

What do you think of the bill, do you agree that physical goods sold online should be taxed in the same manner as those bought in store?

  • Jacob Boswell


  • freedomspopular

    If this passes:
    1) I will definitely be curbing my online spending
    2) I’m sure a lot of other people will too. That should DEFINITELY help the economy improve, right?
    3) In order to stay competitive, B&M retailers have had to change their approach in favor of the consumer. Should this bill pass, that will no longer be the case. A lose-lose situation for consumers in general.

  • MY question is… will it be a flat tax? Or does it depend on the state the online store is operating out of? If it’s the latter then it could affect certain online retailers worse than others. Doesn’t seem like fair playing ground to me

    • You’ll pay the tax rate of the area the product is shipped to. If you live in New York City then you’ll pay New York City sales taxes.

  • Ugh, now shopping online is way less appealing.

  • What about digital distribution such as Google Play and Steam where their actually is no physical object being purchased? Will this apply to digital only content as well? This could greatly hurt DLC.

    • Reader

      The article says there wouldn’t be a tax on digital goods, such as apps and downloads.

  • We can not let the government takes us out the money we work daily from our pockets.. Tax for this, tax for that… meanwhile they are having a luxury live, the people who work hard has no time for a vacation.. Its a shame we have to pay for every thing!!!

  • Kyle

    These fuckers aint got nothing better to do? Always trying to get another $ out of people.. As Fd as the usa is right now there spending there time voting on a online marketing sales tax bill. !

  • Aaron Evertson

    I absolutely support this law. There are no new taxes here, and though I can’t say I’ve been good about paying Use Tax, it’ll be a big boon to state funding (for such things as Roads, Education, Research, etc.) and provide us all with things we typically take for granted. Additionally, it does make shopping more fair, which supports small businesses.

    As to the politician’s being rich and lazy, yes, they are. It’s because people are unwilling to blame the congressman they elected for the problems they cause. There’s no shortage of accusing out of state Congressmen of being corrupt and terrible, but in practice we support our incumbents, even when they do things like only go to work 120 days out of the year or increase their paycheck with no discernable justification.

    • Kyle

      Yeah because all the taxes we paid last year wasnt enough! They have tons of income from taxes to bridge tolls all they want is another way to nickel and dime people.. And yeah alot of people should be against it cuz the money never goes to what its supposed to its wasted or goes to some Bs or gets “misplaced” just look up 3 trillion in tax missing.. And dont get me started on the community those fuckers are quick to put a note on my door saying if i dont cut my grass thats not even that tall there charging and putting a lean on my house but u go to any city owned park or stop light and the grass is 3 feet tall!

    • ForTehNguyen

      yes lets feed the govts with more tax dollars!

    • Nizo

      As if they would actually use the tax revenue for anything worthwhile. If that was the case we’d have the most modern infrastructure in the world!! But you’ll never see that, because the vast majority of the revenue generated by new taxes ends up lining the pockets of the corrupt officials at every level of our government. Just say NO to new taxes. We’ve got more then we need already…

  • Greg Cardall

    What is the current approval rate of congress? 30%? Less? I’ll go out on a limb and say I don’t think I’ll be supporting anything Congress does at the moment, especially bills passed that TAKE from the American people.

  • Nizo

    I oppose ANY and ALL forms of taxation by the US government. I will simply stop shopping from large online retailers if they pass this law. I refuse to pay more taxes. I REFUSE.