Online sellers may have to pay sales taxes in NC

Online retailers such as Amazon.com and eBay have been enjoying the benefits of not paying sales taxes in states like North Carolina for years — but a controversial U.S. Senate bill would permit the collection of taxes for online purchases.

The bill, known as the Marketplace Fairness Act: and introduced in the Senate last week, would allow states to collect state and local taxes from internet retailers at the time transactions take place.

Per current law, states are only authorized to collect sales taxes if the merchant has a physical store, business office or warehouse in the state. Consumers are technically required to pay the tax on online purchases, but it is rarely enforced by retailers.

Supporters of the bill in North Carolina say the legislation would benefit brick-and-mortar businesses that create jobs in the state, helping them compete with online retailers.

Christie Burris, spokeswoman for the N.C. Retail Merchants Association, said the state loses nearly $436 million in sales tax revenue when residents do not report online purchases.

Burris said the bill would not create a new tax, but force businesses to pay a tax that they already owe.

“It’s time to create a level playing field,” she said.

John Gorsuch, director of UNC Student Stores, said he is in favor of the bill because it would help standing businesses like Student Stores keep pace with online competitors.

But some online marketplaces that host retailers on their site, such as eBay, fear the bill would place a burden on those small businesses.

In an email sent to the eBay community, eBay CEO John Donahoe said the bill could undermine competition, consumer choice and low prices for small online businesses.

Tod Cohen, vice president and deputy general counsel of government relations at eBay, said in a statement that the bill would impose unfair taxes on the internet retailers hosted by eBay.

“(It would be) treating them the same as large national retailers who have the resources and capabilities to collect sales taxes nationwide,” Cohen said.

Businesses generating less than $1 million annually in U.S. sales can qualify for a small seller exception, which would exempt them from paying the taxes, the bill states.

Lew Ebert, president and CEO of the N.C. Chamber of Commerce, said the bill would also help simplify the state’s tax code.

“Online-only retailers (would have) to adhere to the exact same tax policy that North Carolina retailers comply with every day,” Ebert said.

Brent Lane, director of the Carolina Center for Competitive Economies, said the bill is multifaceted — but small online businesses would feel the most impact.

Still, Lane said, the bill would benefit North Carolina’s economy and its residents.

“When the state wins, we all win,” he said.

The bill, which has bipartisan support, is expected to continue moving forward in the Senate next week.

Contact the desk editor at state@dailytarheel.com.