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No Online Sales Tax Legislation On the Horizon

Posted on 11.16.2014

E-commerce merchants have reason to rejoice this holiday season (and into 2015) as it appears a bill requiring the collection of state sales tax on online purchases won't be on the agenda in the U.S. House of Representatives for the foreseeable future.

Legislators are apparently split over whether they should pass the Marketplace Fairness Act, which forces onnline retailers to collect sales tax in those states where they have no physical presence (or nexus).

The bill is backed by national brick-and-mortar retailers (e.g. Walmart, Target), who have to collect sales tax on the web because they have physical operations in the states that collect sales taxes. They often are competing against smaller web shops that are located out of state and therefore are not required to collect sales tax under the existing Supreme Court precedent.

A bipartisan group passed the Marketplace Fairness Act out of the Senate last year on a 69-27 vote, led by Sens. Richard J. Durbin, D-Ill., and Michael B. Enzi, R-Wyo., but it has languished in the House.

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