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The Nightmare of Sales Tax for Everyone

Even-small business trade organizations and lobbyists have had a hard time agreeing to a position on the issue, primarily because their constituents are both online and bricks-and-mortar retailers. The National Federation of Independent Business and the National Small Business Administration declined to comment for this story.

There are four bills between the House and Senate proposing Internet sales tax regulation: the Marketplace Equity Act of 2011 ( H.R. 3179); the Main Street Fairness Act ( H.R. 2701) and its correlating Senate bill, ( S. 1452); and the most recent bill, the Marketplace Fairness Act ( S. 1832), introduced in November by Sen. Mike Enzi (R-Wyo.) and 11 co-sponsors -- and the most likely to pass, observers say.

"This one has enough potential and effort to get moved through even in an election year. The pain that states are in is putting more pressure on both the states and the government to do something," says Steven Aldrich, CEO of Outright.com, an online accounting program to help small e-commerce sellers.

Backers of the Marketplace Fairness Act, which has been referred to the Senate Finance Committee for review, says it means "states would have the option to collect sales and use tax revenues from out-of-state sellers through a new, simplified tax system."

The legislation would streamline "the country's more than 7,500 sales tax jurisdictions and provide two options by which states could begin collecting sales taxes from online and catalog purchases."

States that become members of the Streamlined Sales and Use Tax Agreement (24 have already) can require online sellers to collect sales taxes. The agreement would "bring uniformity to the definitions of items in the sales tax base, reduce the paperwork burden on retailers and incorporate new technology to modernize administrative procedures."

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