eBay Opposes Internet Tax Law

May 10, 2013

Online giant eBay is leading the charge against the Marketplace Fairness Act, a legislation that would allow states to require out-of-state vendors to collect sales taxes just like the physical stores at the customer’s location, according to Time magazine.

The Marketplace Fairness Act has passed in the U.S. Senate and is now being considered in the House of Representatives. eBay says the mandate would be an unfair burden on small businesses, even though small businesses are among the bill’s strongest supporters, the magazine reported.

For years, online sellers have benefitted from what brick-and-mortar retailers call the “Internet sales tax loophole.” For the most part, e-retailers are only required to charge customers sales tax if the vendor has a physical presence in the state where the purchase is being made, according to Time.

Consumers are supposed to pay the appropriate sales tax when they file their annual federal and state income taxes, but almost no one does. The situation gives e-commerce businesses an obvious pricing advantage over brick-and-mortar stores and online retailers with a physical presence in the state, which must always tack on sales tax, Time reported.

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