U.S. Senate Approves Taxation of Internet Sales

As reported by the Baltimore Sun (limited free views available), the United State Senate approved the Marketplace Fairness Act of 2013 on May 6, which would allow states  and local governments to impose their existing sales tax on internet sales.

The bill, which passed 69-27, would resolve a long-standing complaint of  brick-and-mortar business owners, who say they struggle to compete with online  companies that don’t charge sales tax. The legislation requires Internet sellers  to collect sales tax and send that money back to state treasuries.

This legislative proposal, should it pass Congress, would also have a broader effect in Maryland.  As previously reported on Conduit Street,

For Marylanders, this legislative change at the federal level will result in the gas tax, which passed during the 2013 session, increasing at a lower rate.  As reported by the Baltimore Sun:

In Maryland, the General Assembly just approved legislation that is expected to increase the state’s 23.5-cents-a-gallon gas tax by about 20 cents by mid-2016. But if the federal government allows the state to apply its sales tax to Internet retailers, motorists could be spared about 7 cents of the gas tax increase, General Assembly officials have said.

The motor fuel tax legislation that passed phases in a 5-cent sales tax on gasoline with the final two percent increase taking effect if the federal legislation does not take effect.

Governor O’Malley, Treasurer Kopp, and Comptroller Franchot have expressed their support of the Marketplace Fairness Act.

Additional information on the Marketplace Fairness Act of 2013 can be found on the NACo website.