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NLBMDA: Senate Explores Online Sales Tax Fairness

Just before the August recess, Senate Majority Leader Harry Reid (D-Nev.) said he planned to bring up an extension of the Internet Tax Freedom Act when lawmakers return to Washington in September. Sen. Reid, who supports the Marketplace Fairness Act, could try and combine it with the Internet Tax Freedom Act, or move a two-month extension of the moratorium on Internet access. Chairman of the Senate Finance Committee, Sen. Ron Wyden (D-Ore.), who opposes the Marketplace Fairness Act, has been urging colleagues to resist merging the two bills and instead pass a short-term extension of the moratorium.

Should the Senate only approve a short-term extension of the Internet Tax Freedom Act in September, Senate e-fairness backers would have time to build support for combined legislation that could be considered after the November elections. Successfully combining and passing the bills in the Senate would create a potential showdown with the House over the Marketplace Fairness Act.

Online-only retailers are exploiting a massive loophole by not collecting sales tax at the time of purchase. The loophole exists thanks to the 1992 Supreme Court decision in Quill Corporation v. North Dakota, which ruled that online merchants do not have to collect sales tax in states where they lack a physical presence.

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Tax laws have not kept up with the rapid innovation in the online retailing environment. In 2012, states lost $23 billion in uncollected sales tax from online purchases. As a matter of interstate commerce, Congress must grant states the authority to enforce sales tax collection and remittance from out-of-state sellers.

NLBMDA supports the Marketplace Fairness Act to level the playing field between community-based retailers, such as lumberyards, and out-of-state online retailers. In addition, NLBMDA is a member of the Marketplace Fairness Coalition, which is comprised of over 150 organizations committed to fair sales and use tax laws. Dealers are encouraged to visit NLBMDA’s Legislative Action Center at www.dealer.org, contact your Representative and Senators, and urge them to pass the Marketplace Fairness Act before the end of 2014. _

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