The Marketplace Fairness Act of 2013 (the “Act”) was introduced in the U.S. House of Representatives and the U.S. Senate on February 14, 2013. The Act would give states the option to require the collection of sales and use taxes owed by remote sellers if the remote seller has gross annual receipts in total remote sales in the United States for the preceding calendar year of more than $1 million. Under current law, states rely on consumers to track and self-remit use taxes.
According to the National Conference of State Legislators, the gap between what consumers have paid in-store and online amounts to more than $23.3 billion, of which $628.6 million is lost revenues for the State of Ohio and local governments.
In addition to raising revenues for states and localities, the Act would enable brick-and-mortar retailers to better compete with online sellers that don’t charge sales tax.
Two similar bills were introduced in 2011 but died before being approved. The Act resolves the differences between the two previous proposals, increasing the chances it will pass.
Galina Velcheva is a senior manager in our Cleveland CPA, business and financial advisory office location. Have questions about the Marketplace Fairness Act? Contact our Sales and Use Tax Group at 440-449-6800.