Recent legislation that passed the House is poised for a vote in the Senate, should they get around to it anytime soon. While this legislation’s intent is to level the sales tax playing field between local retailers and online retailers, it will likely do more harm than good in the long run.
- Internet Tax Freedom Act (ITFA): Placed a moratorium on internet access taxes that expires on November 1, 2014. A few states that were charging taxes prior to the moratorium being enacted were grandfathered and allowed to continue collecting access taxes. The house also passed The Permanent Internet Tax Freedom Act (PITFA) last week that permanently bans taxing internet access.
- Marketplace Fairness Act (MFA): Would allow states to collect sales taxes from online retailers regardless of whether they have a physical location (or nexus) in the state.
- Marketplace and Internet Tax Fairness Act (MITFA): Essentially a combination of the above two laws, MITFA would extend the moratorium on internet access taxes for 10 years and ban grandfathered states from collecting access taxes all while allowing states to collect sales tax from online retailers without a nexus in the state.
So we’re up for a little banter between the House and Senate over taxation of access and online sales and I’m not surprised to see them combined as a way to get a little leverage on moving things ahead. As usual, when legislation like this is enacted, some of the longer term effects Continue reading