Online Sales Taxes March Forward, While Ebay Rallies Its Anti-Tax Troops

Online sales taxes took another step closer to reality on Monday evening (April 22). The U.S. Senate voted 74-20 to start floor debate on the "Marketplace Fairness Act," which would allow states to collect sales taxes through online retailers even if the merchants don't have physical operations in those states.

The Monday vote bypassed the Senate Finance Committee, where similar bills have died repeatedly since 2001. Senate debate on the bill is expected to resume Tuesday morning.

If passed by the Senate, the bill will still have to be passed by the House of Representatives and signed by the president before becoming law. After that, states would have to meet certain requirements, including providing free tax-calculation software, in order to collect sales taxes through non-resident online merchants.

Meanwhile, eBay (NASDAQ:EBAY) is sending email messages opposing the bill to at least 40 million eBay users, including most eBay Marketplace sellers. The messages starting going out on Sunday (April 21), Reuters reported.

In the messages, eBay CEO John Donahoe urged the users and sellers to write to their senators and congressmen asking for changes. Donahoe singled out an exemption for merchants with less than $1 million in online sales that would be subject to sales tax, arguing that online retailers with less than $10 million in taxable sales or fewer than 50 employees should be exempt.

"This legislation treats you and big multibillion-dollar online retailers—such as Amazon—exactly the same," Donahoe wrote, according to Reuters. "Those fighting for this change refuse to acknowledge that the burden on businesses like yours is far greater than for a big national retailer." Amazon (NASDAQ:AMZN), which once opposed online sales taxes, supports the new bill.

The eBay campaign involves at least four times as many users and sellers as its previous attempt to rally them on a political issue. In 2006, the company emailed fewer than 10 million users, urging them to support net neutrality.

For more:

- See this Reuters story
- See the bill's text

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