Tuesday, May 7, 2013

US Internet sales tax passes Senate

The Senate passed a bill on Monday that gives the states an easier process to collect sales taxes for online purchases, but its final prospects remain uncertain.

Even so small online retailers are already thinking about the bill's potentially large impact on their operations.

Nancy Mashragi would seriously consider reducing her sales to less than $1 million a year so she'd be exempt from collecting sales tax from customers.

Mashragi sells refurbished electronics through her eBay store, Concept Electronics. Last year she sold roughly $3 million worth of merchandise. But if the Senate passes the Marketplace Fairness Act tonight, she may cut iPads, which have a high cost but low profit margin, from her inventory so she'd fall within the proposed $1 million small-seller exemption.

"That's something off the bat we'd cut out because it's not worth it for us," says Mashragi, who is based in Clearwater, Fla., and collects sales taxes for purchases made by Florida residents. "Why would we go through the hassle of going over that threshold and being responsible for all those taxes on something that has a very low profit margin?"

It's a concern she and other small online retailers share. The bill, which passed the Senate 69-27, now heads to the House, where it faces an uncertain future because some Republicans view it as a tax increase. President Obama has said he supports the bill.

The act would overturn decades-long precedent and leave many small online sellers with the task of figuring out how to manage collecting and remitting sales tax to nearly every state.

Full Story on USA Today:

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