WASHINGTON—By a 69-27 vote, the U.S. Senate has passed the Marketplace Fairness Act, which requires online retailers to collect sales taxes for the states to where they ship goods.
If passed by both houses of Congress, the bill would overturn a 1992 Supreme Court decision that forbade states from collecting sales taxes from companies that had no physical presence in those states. Retailers with annual sales of under $1 million would be exempt.
Hundreds of associations, labor unions and retail organizations, including the Tire Industry Association and the National Retail Federation, support the bill. These organizations say the ban on state taxes for Internet sales hurts "brick-and-mortar" retailers.
"This has triggered lost profits, layoffs and even bankruptcies and store closings," said Gordon Gough, executive director of the Ohio Tire & Automotive Association, in a May 2012 op-ed article for the Columbus Dispatch.
The National Conference of State Legislatures also supports the bill, saying its members lost $23 billion in tax revenue last year because they couldn't collect taxes on Internet sales.
However, opponents of the bill say the bill would be punitive to online businesses and give states too much authority to reach across state lines to collect taxes. Online Stores, an e-commerce company based in New Stanton, Pa., estimates the bill would close more than 9,000 businesses and put more than 200,000 out of work.
The House version of the Marketplace Fairness Act faces an uncertain future, because of Republican opposition to increasing state sales tax revenue, according to Roy Littlefield, TIA executive vice president. "However, Republican governors working to balance their budgets may soften that opposition," Littlefield said.