Online sales tax supporters push back on eBay

The Marketplace Fairness Act, which would give states more authority to tax out-of-state retailers, cleared several procedural hurdles in the Senate last month, and is expected to get a final vote next week.

{mosads}EBay has tried to rally its users against the bill, sending emails to millions of users last month. The company wants a provision that would exempt businesses with less than $10 million in out-of-state sales, up from the $1 million exemption currently in the bill.

It also has said that it would be a burden to force businesses to collect for other states, a concern shared by anti-tax groups like Grover Norquist’s Americans for Tax Reform and Heritage Action.

Supporters of the bill say it closes a loophole that has given online retailers an unfair leg up on their brick-and-mortar counterparts. The Supreme Court ruled in 1992 that states could only collect sales taxes from businesses that are physically located in the state.

In its letter, the marketplace fairness group said the bill would mandate that states give businesses free sales tax software and would not give states more authority to audit companies – something Donahoe said he is worried about in a recent interview with The Wall Street Journal.

The bill and its $1 million exemption, the group said, “would exempt over 99% of all online sellers from any collection or remittance requirement and, of course, eliminate any distant concern about audits.”