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Summary:

The Marketplace Fairness Act — which will force online merchants to collect tax on behalf of other states — passed the Senate on Monday.

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The Marketplace Fairness Act, an internet sales tax measure that supporters say will help mom-and-pop retailers compete with online retailers, passed the U.S. Senate by a 69-27 margin on Monday and will soon go before the House.

The law calls for internet retailers with more than $1 million in annual revenue to collect sales taxes from out of state shoppers. State governments claim it will help them collect billions in unpaid revenue while brick-and-mortar retailers, who also support it, say it will level the playing field by forcing online competitors to collect tax.

Opponents of the law, which include libertarians and states like Oregon that have no sales tax, complain it will lead to regulatory burdens tied to collecting tax from numerous state and local governments. Supporters counter that the task will not be that onerous because the law would require states to provide merchants with free tax collection software.

For consumers, the law means paying more sales tax on online purchases. Right now, consumers typically pay only if the online merchant is located in their home state.

The bill will now go to the House where conservatives say they will oppose the bill; they may not succeed, however, as politicians from both parties have argued that the bill does not impose a new tax but instead helps collect taxes that are already owed. The Obama Administration supports the proposed law.

eBay, one of the law’s prime opponents, said in a statement that it will keep pushing for merchants who collect less than $10 million to be exempt.

To understand more about the law, see GigaOM’s primer on who’s for it and who’s against.

  1. joshuaofaustria Monday, May 6, 2013

    It’s only a matter of time before they get cispa or whatever internet restriction bill passed.

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  2. This is one of the biggest loads of crap! keep going government and tax and take our money for everything we do in life to function, I am not a person who can vote myself a raise every year and I am not one that can get help from company insider with stock market pics.

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  3. Daniel Wagler Tuesday, May 7, 2013

    Great how they can come up with new revenue sources, but cant vote away the unbelievable salaries, pensions, and health care they all become privileged to. so who do these guys represent anyway- I cant think of a single person who would ask for this or want this tax, in fact- some choose to live where there ISNT this type of tax..so WTF- soon they wilol be taxing the TIME spent on the internet.
    Our GOVT has a unique ability to take an invention, and bastardize it for its own use and control, take the automobile for instance…#1 revenue source for all police depts across the US- now is THAT what Ford Motor Company envisioned, or was it something to do with moving people and objects around easier??

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    1. Planned destruction of the American economy. Many small businesses that employ American citizens sell online and they will be forced to lay off staff. At the end of the day, there is going to be higher unemployment and less money left in your pocket.

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  4. Article 1, Section 9 of the US Constitution:

    No Tax or Duty shall be laid on Articles exported from any State.

    I’m tired of Congress violating the constitution whenever they feel like it.

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    1. Josh Goldberg Tuesday, May 7, 2013

      it’s not unconstitutional because it’s no the fed levying the tax. it’s the state where you live. Most states already have the tax codified – a ‘use’ tax. This law moves the point of collection of that tax from self-reporting to collection by the point of sale.

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      1. >it’s not unconstitutional because it’s no the fed levying the tax.

        Oh, so the federal government is passing a state law. Sounds legit.

        >Most states already have the tax codified – a ‘use’ tax.

        And every internet merchant is already required by their state to collect that tax when shipping inside that state.

        >This law moves the point of collection of that tax from self-reporting to collection by the point of sale.

        So what you’re saying is that this law is taxing Articles exported from any State. Got it. Unconstitutional.

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  5. Just Another Poster Wednesday, May 8, 2013

    Software can’t fix the horrible Sales Tax policies set by the states.

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