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Internet Sales Tax Update

February 12, 2016

Yesterday, the U.S. Senate passed the Trade Facilitation and Trade Enforcement Act of 2015. While this customs bill removes frictions for global ecommerce sales, it also triggered developments on the Internet sales tax front. Before passage, proponents of the burdensome Marketplace Fairness Act (MFA) threatened to oppose the underlying customs bill without inclusion of the MFA.  In order to avoid that scenario, Senate Republican Leadership promised that a version of the MFA would get a vote “sometime this year”.  Although vague, this commitment from Leadership proved enough to convince MFA proponents to withdraw their opposition.

Additionally, in response to Congressional inaction on federal Internet sales tax legislation in 2015, state legislators throughout the country have introduced bills in 2016 aimed at pushing a solution to this issue in the courts. These “Supreme Court challenge bills” have been introduced in multiple states, including South Dakota, Nebraska, and Rhode Island. If passed and litigated, the hope by proponents is that the Supreme Court would ultimately take the case and overturn the legal precedent, allowing states to collect from out-of-state sellers without a physical presence. In addition, proponents are also pushing a series of other Internet sales tax “nuisance bills” with the expectation that doing so will pressure Congress to act on federal legislation in 2016.  

eBay will continue to advocate for legislation that removes barriers to small online retailers selling domestically and abroad.  This advocacy includes seeking a workable Internet sales tax solution that avoids burdensome tax collection and remittance requirements for approximately 9,600 taxing jurisdictions.  Check eBay Main Street regularly for updates on this important legislation.