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Flickr photo via DonkeyHotey
Flickr photo via DonkeyHotey

The U.S. Senate is expected to vote on a bill this week which could make it easier for states to collect sales tax from purchases made online, whether the online retailer has a physical retail presence in the state or not. The measure is expected to pave the way to a more cohesive sales tax collection process, rather than what some view as a mishmash system that now varies by state.

The Marketplace Fairness Act has created strange bedfellows and it is a complex issue in which two of the biggest names in e-commerce, Amazon.com and eBay, are on opposite sides of the fence.

In fact, Reuters reports that eBay CEO John Donahoe on Sunday began sending emails to about 40 million users asking them to urge Congress to alter the legislation, which includes an exemption for online merchants who derive less than $1 million in out-of-state sales.

In the email, Donahoe suggested that the exemption should apply to businesses with less than $10 million in out-of-state sales or more than 50 employees. He also suggested that the legislations would benefit Amazon.com, one of eBay’s key rivals.

donahoe
John Donahoe of eBay

“This legislation treats you and big multi-billion dollar online retailers – such as Amazon – exactly the same,” Donahoe wrote, according to the Reuters story. “Those fighting for this change refuse to acknowledge that the burden on businesses like yours is far greater than for a big national retailer.”

In addition to Amazon, supporters of the Marketplace Fairness Act have included large retailers such as Best Buy and Wal-Mart. Also, some smaller retailers are supporting the effort. The Alliance for Main Street Fairness today issued a statement about eBay’s campaign, noting that the company is supporting a “government-sanctioned subsidy” that gives online retailers “an unfair competitive advantage over their brick-and-mortar counterparts.”

“eBay is desperately trying to hold on to the unfair tax advantage their top sellers have over local businesses,” the statement said.

Amazon.com has argued for a federal online sales tax system, suggesting it would be far simpler to administer than the varying regulations now in place. In fact, Amazon’s VP of Global Policy Paul Misner wrote a thank you letter to Congress about the bill in February in which he said:

“Amazon.com has long supported a simplified nationwide approach that is evenhandedly applied and applicable to all but the smallest volume sellers. With this in mind, I am writing to thank you for your bill, which will allow states with simplified rules to require sales tax collection by out-of-state sellers who choose to make sales to in-state buyers.”

The Seattle online retailer has brokered deals in recent years with a number of states to begin collecting sales tax, changing its hard stance on the issue. The move also comes as the company establishes more brick-and-mortar efforts across the country, including through its Amazon Lockers program.

Previously on GeekWireWhy Amazon and other retailers are supporting this national sales tax legislation

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