In March, activity around the Marketplace Fairness Act (MFA) picked up in the U.S. House of Representatives, as the House Judiciary Committee, led by Chairman Bob Goodlatte (R-VA), held a hearing entitled Exploring Alternative Solutions On The Internet Sales Tax Issue.   During the hearing, Judiciary Committee Members listened as six witnesses discussed various alternatives to the Marketplace Fairness Act.  Proposals ranged from a pure origin source framework, to an origin source hybrid structure, a reporting-based model and other models based on the Streamlined Sales and Use Tax Agreement. 

Based on the questions posed by the Members participating, it appeared Members on the Committee had differing opinions on how to address the Internet sales tax issue.  Due to the lack of agreement between the Committee Members, it does not appear that the Committee has a clear mandate for moving forward.  After the hearing, Chairman Goodlatte expressed that the Committee will evaluate the various proposals, receive feedback from all interested stakeholders and pursue a legislative solution that compliments the Internet sales tax principles he released last September.

Although it looks like the Marketplace Fairness Act (MFA) currently has no path forward in the U.S. House of Representatives, there is still concern that proponents of the legislation will try to force the House to take up the issue by attaching the MFA to a “must pass” piece of legislation before the end of the year.  Given the fact that it is an election year and Members may be hesitant to vote on legislation that could be seen as a tax increase, potential action on the MFA may come after the November 4th general election, or the so-called lame duck session.  It is reported that the Internet Tax Nondiscrimination Act, which expires in November 2014, could be a potential vehicle for the MFA.  The federal government relations team is actively working to ensure that the interests of small technology-enabled businesses are considered in any Internet sales tax proposal moving in Congress.

There has also been activity related to the Internet sales tax issue at the state level.   In Arizona, a bill was introduced that would lower the state’s income tax in an amount commensurate with the total additional sales tax raised by Congress passing the MFA.  The eBay Inc. State Government Relations team met with bill sponsor and discussed our small business concerns.  The Representative amended his bill to address our concerns; however, it appears the bill will not move this year. 

Also, after Denver District Court Judge Morris Hoffman temporarily blocked the State of Colorado’s Internet sales tax reporting law, the Colorado state legislature introduced a bill that would create a new sales tax collection paradigm.  The bill would require a company to collect the state sales tax if the corporation has a member of the corporate family within Colorado.  eBay Inc.’s State Government Relations Team is working with coalition partners to engage the state legislature on this issue and are actively monitoring the legislation to ensure that the interests of the eBay Inc. community are represented.