Marketplace Fairness Act in Hands of U.S. House

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A battle is brewing in Washington. There's a legal loophole that allows online retailers from out of state to avoid being taxed. But many traditional brick-and-mortar business owners want to see laws passed to close it.

The Marketplace Fairness Act passed last year in the Senate, and now it's sitting in the House with a key Virginia politician in charge of the decision. But merchants say if we don't shift the burden to online retailers soon, other taxes in the commonwealth will skyrocket to cover the difference.

Small business owner Sarah Paxton says it happens all the time. A customer strolls into her furniture store, falls in love with a product, but then something happens, and the consumer walks away without closing the deal. "Then either goes home or goes directly to their phone. Maybe it's exactly the same thing, exactly the same price and the only thing that's different is whether or not they're going to have to be charged sales tax,” Paxton said.

Online merchants shipping across state lines have evaded charging sales tax up until now. Paxton says that gives the Internet retailers an unfair advantage.

Right now the Marketplace Fairness Act rests with the House. Congressman Bob Goodlatte, chair of the judiciary committee, says he has reservations about the act.

In a statement released Wednesday to NBC29, he says, "I have serious concerns regarding the Marketplace Fairness Act passed by the Senate and do not believe this legislation is the answer. Any online sales tax system must be simple enough for every business to use and fair, so that all businesses - whether online, brick-and-mortar, or brick-and-click - are on equal footing."

If that doesn't go through by the end of the year, we could see gas taxes skyrocket. That's because, under the McDonnell administration, those revenues were built into the transportation bill.

CEO of the Retail Merchants Association Nancy Thomas says this issue could hurt everyone in Virginia.

"We really need to start leveling the playing field because pretty sooner or later, if we don't, the bricks and mortar community is going to go away,” Thomas said. “And I don't think as Americans or as Virginians, we want to see that happen."

What many don't realize is that online shoppers are supposed to be paying that tax right now; the burden is on the consumer to save receipts and file it with your state tax returns each year.

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