The Marketplace Fairness Act – “Internet Sales Tax”

The proposedMarketplace Fairness Act (Internet Sales Tax) would be a credit positive for high sales tax states and local jurisdictions as well as dedicated sales tax-backed bonds.  Examples of states that would benefit include Tennessee, New York, California and Washington, where the increased revenue stream would help financial operations.  Local jurisdictions such as Seattle, WA, Montgomery, AL, and Chicago, IL would benefit, as would specific sales tax-backed bonds like the San Diego Association of Governments, or SANDAG.  The Act would require internet retailers with gross receipts of more than $1.0 million to collect and remit sales and use taxes to state and local governments. Morgan Stanley estimates states lost $18 billion in sales and use taxes in 2012 due to the absence of a law like this.  Passage is still uncertain, as the initial bill passed the Senate but faces opposition in the House.  A final decision on the bill is not expected until the fall, but will be an important one for a broad range of municipalities.