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Marketplace Fairness Act Internet Sales Tax Update

After years of brick and mortar retailers pushing to force the collection of sales tax by internet sellers, there seems to be quite a bit of movement lately to bring a national consensus to this issue. In late March, the United States Senate voted 75-24 to add the Marketplace Fairness Act of 2013 as an amendment to the federal budget. While this was largely a symbolic vote, it shows the overall mood of the Senate is in favor of the Marketplace Fairness Act. The federal bill does not itself mandate the collection of sales tax, but authorizes the individual states to collect sales tax from remote internet sellers with annual sales over $1 million.

Also last week, New York’s highest court upheld the 2008 New York statute that said affiliates of out of state internet retailers provided enough presence in the state to require the collection of sales tax from such companies as Amazon and Overstock. (As a result, Amazon and Overstock had stopped their affiliate programs in New York.) A copy of the opinion can be found here.

Finally, my home state of Michigan has introduced a similar bill to collect sales tax from all internet sellers with more than $10,000 in sales through affiliates in Michigan, and I have been told that the bill should receive a hearing soon in front of the tax policy committee. A copy of Michigan’s bill can be found here.

We will continue to monitor the progress of the federal Marketplace Fairness Act and related state laws. If you have any questions regarding how the collection of sales tax may impact your business, please contact attorney Adam Zuwerink at 231.457.4235 or adam@westmichiganlaw.com