U.S. Senators Mark R. Warner and Tim Kaine, along with Senators Mike Enzi (R-WY) and Dick Durbin (D-IL), introduced the Marketplace Fairness Act of 2017 – legislation that would give states the right to collect the sales and use taxes they are owed under current law from out-of-state businesses or online retailers.
“Right now, small businesses are being forced to compete on an uneven playing field. Local, brick-and-mortar business collect sales taxes from their customers – but many large, online vendors do not,” said Warner. “That practice disadvantages local businesses and robs states of revenue to invest in local priorities like roads, bridges, and schools. This bipartisan bill levels the playing field for bricks-and-mortar retailers to compete against outside and online stores and lays the groundwork for a fairer retail market.”
“I have heard from small businesses across Virginia asking us to help them compete fairly against big online retailers, and I am proud to reintroduce this critically-needed, bipartisan legislation,” Kaine said. “It is unfair for us to ask our brick-and-mortar shops to play by one set of rules and have a different set for those outside of the Commonwealth. We need to level the playing field, and this is a step in the right direction.”
The Marketplace Fairness Act of 2017 would grant states the right to require that out-of-state businesses, such as those selling online or through catalogs, collect state sales taxes on purchases sold into their states. Under current law, online retailers are required to collect and remit sales taxes to states only where the retailer has a physical presence, putting brick-and-mortar small businesses at a disadvantage against online retailers. This sales tax loophole treats out-of-state retailers differently than local businesses, creating a price disadvantage. In Virginia alone, this has led to hundreds of millions of dollars in owed revenues that are never paid, undermining Virginia’s ability to invest in important programs, from K-12 education to funding for roads and bridges. This legislation would change this physical location requirement, while providing an exemption for small businesses whose sales do not exceed $1 million per year.
The Senate passed a version of the Marketplace Fairness Act in 2013 on a bipartisan vote. The House did not act on the legislation and it did not move forward. This legislation is supported by the Virginia Chamber of Commerce, Virginia Association of Counties, the Virginia Municipal League, and numerous local governments and small businesses in the Commonwealth.
U.S. Senators Lamar Alexander (R-TN), Heidi Heitkamp (D-ND), Elizabeth Warren, (D-MA), Roy Blunt (R-MO), Jack Reed (D-RI), Sheldon Whitehouse (D-RI), Ben Cardin (D-MD), Edward Markey (D-MA), Tammy Duckworth (D-IL), and Mike Rounds (R-SD), are also cosponsors of the legislation.