Internet Sales Tax Bill Approved by Senate

marketplace fairness actYesterday, the Senate approved the Marketplace Fairness Act, a bill proposed to add state sales tax to products and services sold by e-Commerce businesses. While the bill is intended to even the playing field between online businesses and brick-and-mortar stores, “The migration of commerce to the web and mobile devices is about much more than the tax-free percentage shaved off in online shopping carts,” reports Wired.com.

Opponents of the bill believe that a transition to an omnichannel sales tax system will mean small businesses pay the price, which is precisely what big retailers want. However, the cost won’t stem from losing business to higher prices, nor from paying for software that calculates varying state sales tax rates (the bill specifies that states must provide free sales tax software to businesses). Rather, smaller e-Commerce businesses will pay with their time as well as the attorney’s fees from having to deal with the bureaucracies of the 46 states that collect sales tax – something big retailers have the necessary resources to comfortably manage.

“The complexity is not first of all in the calculating of the tax,” Brian Bieron, senior director of global public policy at eBay Inc., told Wired.com. “The reason this is the challenge to small businesses in particular is the number of state tax authorities who can come after you with their tax laws. … That’s a dramatic and negative change. And there’s no software for that.”

If the House passes the bill, the “Internet sales tax” will also undoubtedly drive cost-per-click (CPC) up as the added fees trickle down to online marketing spend. As PPC managers, we will be following the progression of the bill closely. Visit our blog for the latest on the Marketplace Fairness Act.