Internet Sales Tax Poised to Pass Senate

A bill allowing states to collect sales tax from online retailers that lack a physical presence in their borders appears primed to pass the Senate this week. The Marketplace Fairness Act passed a procedural vote 74-20 Monday as the White House gave its explicit support for the bill, signaling smooth sailing ahead for a full vote expected sometime this week.

The Marketplace Fairness Act would require Internet retailers with more than $1 million in annual sales to collect sales tax and send it to customers' states. States would have to establish procedures to collect those taxes.

Under current rules, online sales are not automatically taxed when the retailer doesn't have a warehouse or other physical facility in the customer's state. Customers are supposed to report such purchases in their annual tax claims, but few actually do — thus, cross-border online retail sales go largely untaxedOne study indicates states lose up to $11 billion every year to unreported online sales, though those numbers have been disputed. Read more...