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On March 10, 2015, a bipartisan group of senators introduced the Marketplace Fairness Act of 2015. Similar legislation – the Marketplace Fairness Act of 2013 – was previously introduced in February 2013 and passed by the Senate on May 6, 2013. That legislation failed to be enacted. If passed, the Marketplace Fairness Act of 2015 would authorize states meeting certain requirements to require remote sellers that do not meet a "small seller exception" to collect their state and local sales and use taxes. For more information on the previous legislation, visit Federal Government Introduces New Remote Seller Bill. (Marketplace Fairness Act of 2015, March 10, 2015)


UPDATE: This bill failed to pass during the 114th Congressional Session running from January 3, 2015 to January 3, 2017.  Therefore, this bill has died and would need to be reintroduced to be considered and voted on.


On December 16, 2014, President Barack Obama signed the Consolidated and Further Continuing Appropriations Act, 2015, for sales and use tax purposes. The Act includes a provision that extends the Internet Tax Freedom Act (ITFA) until October 1, 2015 with all provisions unchanged.


On January 9, 2015, the House of Representative introduced a bill (un-numbered) that would permanently extend the ITFA, banning states and local jurisdictions from imposing any new tax on internet access. The proposed bill removes the current effective dates of November 1, 2003 through October 1, 2015 and changes the effective date to be effective for new taxes imposed after the date of the enactment.  It is not clear if states that have been grandfathered under the existing provision could retain their current tax on internet access but it appears that may be the case.  No formal legislation has been introduced that would incorporate the Marketplace Fairness Act into this bill. The bill is sponsored by House Judiciary Committee Chairman Bob Goodlatte, among others.


For our previous news item on this topic, see Internet Tax Freedom Act is Extended Through December 11, 2014.


For an update on this news item, see Internet Tax Freedom Act Extended Until December 11, 2015.


(Consolidated and Further Continuing Appropriations Act, 2015; H.R. 235)


A taxpayer that operates a website through which restaurants offer meals for sale is not subject to New York sales tax on the service fees it charges to participating restaurants because the taxpayer is not a vendor and cannot be designated as a co-vendor on the restaurant sales. Customers can order and pay for their meals from restaurant’s through the taxpayer’s website. When a meal is ordered, the payment submitted to the taxpayer by the customer includes sales tax. The taxpayer remits all funds collected from the customer to the restaurant, minus marketing services fees. The selling restaurant is responsible for remitting any sales tax collected. The selling restaurant is also responsible for delivering the meals and maintains possession, control and care of all items being offered for sale on the taxpayer’s website. The taxpayer charges restaurants an activation fee and a menu update fee. It also charges a fixed monthly marketing partnership fee, in exchange for which the taxpayer will use commercially reasonable efforts to compile, write, and display general information about the restaurant. The taxpayer is not operating a restaurant or similar establishment or providing catering services. The taxpayer is providing internet advertising services and fulfillment services to the restaurants. The advertising and fulfillment services do not make the taxpayer the vendor of the restaurant sales for New York sales tax purposes. Since the taxpayer is providing fulfillment services, it cannot be treated as a co-vendor, jointly responsible with the restaurants for collecting sales tax. If the taxpayer fails to remit to a restaurant the full New York sales tax that the taxpayer collected on behalf of the restaurant, the Department of Taxation and Finance reserves the right to collect those funds from the taxpayer under the doctrine of money had and received. Since the services provided by the taxpayer are not subject to sales tax, the taxpayer is not required to collect sales tax on these charges. (TSB-A-14(27)S, New York Commissioner of Taxation and Finance, August 20, 2014)


President Barack Obama has signed federal legislation extending the Internet Tax Freedom Act (ITFA) through December 11, 2014 as part of the joint resolution which made continuing appropriations for fiscal year 2015. The ITFA was previously set to expire on November 1, 2014. The ITFA bars state and local governments from imposing multiple or discriminatory taxes on electronic commerce and taxes on Internet access.


For an update to this news item, see Internet Tax Freedom Act Extended Until October 1, 2015, Permanent Extension Introduced.


(P.L. 113-164 (H.J. Res. 124), 113th Congress, 2nd Session, Laws 2014)


Representative Lamar Smith (Republican, Texas) has introduced a bill to bar multiple taxes on digital goods and services.  Smith had proposed an earlier bill which failed to pass.  This bill is a revised version of the earlier bill. The proposed bill – called the Digital Goods and Services Tax Fairness Act of 2013 – would only allow a state to tax sales of digital goods and services to customers with a tax address within that state. Additionally, states would be barred from imposing multiple taxes on digital goods. The bill defines digital goods as sounds, images, data and facts maintained in digital form. Internet access service is not included as a digital good in the bill. (H.R. 3724)



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