Internet Sales Tax Met with Opposition

Internet Sales Tax Met with Opposition

One of the many pieces of legislation being slowed by partisan politics in Washington has been the Marketplace Fairness Act (MFA), known for its goal to level the playing field for e-commerce merchants by redefining internet sales tax laws. While passed by the Democratic-led Senate in 2013, the bill has been met with opposition in the Republican-led House of Representatives.

What is the Internet Sales Tax?

Currently, states are only required to levy internet sales taxes if the e-commerce merchant has a brick-and-mortar location in the state’s boundaries. For example, if a shopper in Maine purchases an item online from Walmart.com, a sales tax may apply because there are numerous physical Walmart stores in the state.

Proponents of the Marketplace Fairness Act claim that this scenario gives tax advantages to merchants who fit that unique situation, while other online-only merchants are not able to compete in the same way. Those who oppose the bill claim it takes more money out of the wallets of American consumers, and have even gone so far as to call it taxation without representation.

How Would the MFA Work?

The Marketplace Fairness Act, if passed into law, would allow states to place sales taxes on online transactions even if the merchant does not have a physical location in the state. However, there are a few stipulations, one of which requires that the tax only be applied for merchants who make at least $1 million annually.

While politicians work to find a solution that works for both parties, merchants and consumers are still left waiting.

Pros and Cons

There are a few pros and cons to an internet sales tax. Pros include greater tax benefits for e-commerce merchants who only have a few retail locations or none at all. Big-name e-commerce retailers like Walmart and Target find these benefits easy to come by, since they have a large national chain of retail locations. The MFA would help to give some of the same benefits to smaller e-commerce businesses.

However, a notable con is the tax itself. Opponents worry that more sales taxes, especially on the internet, would unjustly take more money from consumers. This could lead to a lack of interest in online shopping, which could actually hurt the smaller, less-known e-commerce business mentioned above.

Instabill Merchant Accounts

While the government mulls over an internet sales tax, the need for providing goods and services online is apparent. Selling online opens up many more opportunities for merchants to drive sales and grow. And it can all be done with an Instabill merchant account.

Instabill has been providing merchant services to online and retail merchants for more than a decade. Through our wide range of acquiring bank partners, we can deliver completely customizable merchant accounts that will help you make as much money as possible. To learn more, simply get in touch with one of our knowledgeable merchant account managers today.

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