Market Place Fair Trading

Market Place Fair Trading

The Marketplace Fairness Act seeks to level the playing field between brick-and-mortar and e-commerce retail businesses while assisting the states in collecting sales taxes that are on Internet and other remote sales. At issue is a Supreme Court ruling, submitted in 1992 before the pervasiveness of Internet commerce, which prohibits states from requiring remote sellers to collect sales and use taxes owed on purchases from out-of-state vendors. This has created an unfair price disadvantage for brick-and-mortar retail businesses, has led to budget shortfalls for states as sales taxes go uncollected, and has placed an undue burden on consumers who do not realize they owe the sales tax if it is not collected by the seller, leaving them to face penalties and increased scrutiny from state auditors. These measures would give states the authority to manage their sales tax laws while addressing this issue.

Our Position

ASA is committed to supporting the Market Place Fairness Act in order to level the sales tax playing field between brick-and-mortar businesses and Internet sales.

Issue Background

A Supreme Court ruling, issued in 1992 before the pervasiveness of Internet commerce, prohibits states from requiring remote sellers to collect sales and use taxes owed on purchases from out-of-state vendors. ASA believes this has created an unfair price disadvantage for brick-and-mortar retail businesses leading to budget shortfalls for states since sales taxes go uncollected. This has the potential to place an undue burden on consumers who do not realize they owe the sales tax if it is not collected by the seller, opening them up to possible penalties and increased scrutiny from state auditors.

The Marketplace Fairness Act, which was reintroduced in the current session of Congress, would give states the authority to manage their sales tax laws while addressing this issue. On March 22, 2013, the Senate passed its version of the Market Place Fairness Act, S. 743, as an amendment to the Senate budget resolution. The House version, H.R. 684, was introduced in February 2013 and is currently awaiting committee action. Both versions contain language for which payment of online taxes would apply to remote sellers with annual gross receipts in total U.S. remote sales not exceeding $1 million in the preceding calendar year.