Marketplace Fairness Act Could Translate to a Tax Cut for You

By: Rachelle Baillon Email
By: Rachelle Baillon Email

Thursday, May 16, 2013--5:40p.m.
MADISON--Even if you log-on as little as Andy Gricevich does, chances are you still make at least the occasional online purchase.
"I'm a computer guy by necessity only," he said, noting that he probably makes seven or eight online purchases a year. "Mostly pretty obscure poetry books, stuff that's out of print that you can't find anywhere, there aren't enough used book stores around to browse all day for them," he said.

Retailers that don't have a physical presence in a state--like a store--are called remote sellers. Currently, that means they don't have to charge you sales and use taxes when you buy stuff from them. This includes many internet purchases. "There's a little confusion," said Jerry O'Brien, the director of UW Madison's Center for Retailing Excellence. "It doesn't mean it's tax free. Forty five states actually require anyone who buys online to pay taxes," he said.

In Wisconsin, that means you have to self-report that information when you file each April. "I would say the vast majority ignore that and most people do see it as an additional tax," said O'Brien.

Because of concern that non-compliance is costing states revenue, Congress is considering the Marketplace Fairness Act. It'd shift the responsibility for collecting those taxes to the seller. Only retailers whose remote sales surpass the $1 million mark would be included. "The tax is supposed to be being collected now," said O'Brien. "We're really just changing who has to collect it. So the argument that it's going to hurt is actually a blatant acknowledgement that people aren't paying that tax."

If the bill becomes law, it's estimated the taxes would bring Wisconsin an additional $95 million a year. But Gov. Walker is saying he'd like to use the revenue "to provide tax relief to middle class families". A spokesman for the governor says he's not taking a position on the Marketplace Fairness Act, just specifying that he'd like to work with the legislature to use the revenue for a middle-class income tax cut.

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