Internet Sales Tax Update: Senate Introduces Marketplace and Internet Tax Fairness Act

Senators Enzi, Durbin, Alexander, Heitkamp, Collins and Pryor introduced the Marketplace and Internet Tax Fairness Act (MITFA) and the retail industry is listening!

Two of the largest retail industry trade groups in the U.S., the Retail Industry Leaders Association and National Retail Federation, urged Congress to pass a combined version of two bills. Essentially, the MIFTA legislation combines the previously introduced Marketplace Fairness Act (with several technical changes) and a 10-year extension of the Internet Tax Freedom Act, which provides a moratorium on state and local taxation on internet access.

The new bill would allow states to collect sales/use tax on internet retailers with gross sales over $1 million per year. This legislative vehicle follows on the 2013 Senate vote of 69-27 for Marketplace Fairness Act of 2013.

According to the ICSC shopping center trade association, the new legislation provides states the authority to enforce existing sales and use tax laws, if they choose to do so, by adopting one of the following options:

  • Streamlined Sales and Use Tax Agreement (SSUTA): Allows any state that is a member of SSUTA to require remote retailers to collect state and local sales and use taxes.
  • Alternative Minimum Simplification Requirements: States that are not SSUTA members may require remote retailers to collect state and local sales and use taxes if they adopt minimum simplification requirements as outlined in the bill.

Small Seller Exception: The legislation would prohibit states from requiring remote sellers with less than $1 million in annual nationwide remote sales to collect sales and use taxes.

We are tracking future developments and will report more in future posts, so please stay tuned!

Related topics: Retail, Retail Sales, Tax