Online marketplace sales tax pits retailers against Etsy, eBay

Normally a state budget proposal to increase sales tax collection would be the kind of reading a sleep doctor would prescribe.

But the e-commerce sales tax provision in Gov. Andrew Cuomo’s new budget has fired up the tech world—and given hope to New York’s brick-and-mortar retailers that their online competitors might soon have one less advantage.

The state says the proposal is no big deal: It will simply help sales tax collection keep up with the times by treating online marketplaces, like eBay and Etsy, the same as auction houses and consignment shops. If an online merchant sells a sweater to a New Yorker through a marketplace, the marketplace will collect the sales tax (currently that’s the merchant’s job, which often means the tax is not collected). The rule would apply only to marketplaces with sales of $100 million or more. To the tech industry, however, the rule is like telling the owner of a mall to collect taxes on behalf of its stores.

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