| USWorld

Larger text Larger text Smaller text Smaller text | Order Photo Reprints

Senate considers online sales tax bill

About The Tribune-Review
The Tribune-Review can be reached via e-mail or at 412-321-6460.
Contact Us | Video | Photo Reprints

Daily Photo Galleries

By The Washington Post

Published: Sunday, April 21, 2013, 8:27 p.m.

WASHINGTON — The days of tax-free online shopping could finally be numbered.

The Senate is planning to vote on a bill as soon as Monday that would give states the authority to collect sales taxes on all Internet purchases, handing local governments as much as $11 billion per year in added revenue that they are legally owed — but that hasn't been paid to them for years.

Since before the dawn of Internet shopping, the basic rule was that as long as a retailer didn't have a physical presence in the state where the consumer was shopping, the company wouldn't have to collect a sales tax. Technically, shoppers are supposed to track these purchases and then pay the taxes owed in their annual tax filings. Few people, however, do this or are even aware of it.

The result: Online retailers have been able to undercut the prices of their non-Internet competitors for years. Over time, shoppers learned that they could browse products in the aisles of a Best Buy, only to click “purchase” on their smartphones for a tax-free deal from an Internet retailer.

As states have become more strapped for cash since the recession, local officials have fought back. New York passed an “Amazon tax” in 2008 that forced the giant online retailer to collect sales taxes from shoppers who live in the state, even though Amazon didn't have a bricks-and-mortar presence there.

Others followed suit. Nine states require Amazon to collect sales taxes, including California, Pennsylvania and Texas.

The bill introduced by Sen. Mike Enzi, R-Wyo., called the Marketplace Fairness Act, would grant all states the power to collect taxes from out-of-state vendors selling goods to their residents.

States are so eager for the funds that some already have passed legislation that counts on Congress approving the new law.

The Maryland state legislature passed a measure this year that raises the gas tax to help pay for transportation projects. The bill calls for raising the gas tax even more — unless Congress passes some version of the Marketplace Fairness Act.

Likewise, Virginia passed a transportation funding bill that relies on money from a tax on Internet sales.

Enzi's bill technically would not add a new tax liability because these purchases are supposed to be taxed. It also would not require states to collect the money; it would simply give them the authority. Companies with out-of-state revenue of less than $1 million would be exempt from the provision.

The measure appears likely to win a filibuster-proof majority in the Senate, where members approved the idea in March in on a symbolic vote of 75 to 24.

Support does not fall along partisan lines, according to those who have followed the debate. A number of senators in both parties are former governors who understand the fiscal woes of local governments.

But some resistance remains. Sen. Max Baucus, D-Mont., chairman of the Finance Committee, opposes the bill because he argues that it would force businesses to keep track of far too many tax codes. (Montana does not have a sales tax.) Observers say some Republican House members may balk at the idea of the government collecting more revenue. Grover Norquist, founder of Americans for Tax Reform, which is influential among Republicans, has raised concerns about the new bill, saying it essentially adds a new tax to consumers.

The legislation also seeks to simplify the process by helping states make their tax laws more uniform. Enzi argues that there's a way to make the process easier for retailers so that the added work of collecting the tax doesn't become a costly burden.

A spokesman for Enzi pointed to the senator's recent comments on the floor of the Senate.

“Do not let the critics get away with saying this kind of simplification cannot be done,” Enzi said in March. “The different tax rates and jurisdictions are no problem for today's software programs.”

Enzi's bill is garnering strong support from bricks-and-mortar retailers.

“The Marketplace Fairness Act is a commonsense piece of legislation necessary to modernize our federal and state understanding of sales tax laws so that they can keep current with real-world changes in the marketplace,” David French, senior vice president for government relations at the National Retail Federation, said in a letter to members of the Senate last week.

The NRF represents companies such as Wal-Mart, which have lobbied for years to get a law like the one proposed by Enzi.



Show commenting policy

Most-Read Nation

  1. After bombs, Boston Marathon under tight security
  2. Shale oil, gas drilling boom wins favor with labor unions, thwarting environmentalists
  3. Teen OK after riding in wheel well of Hawaii jet
  4. Art from ‘Dick and Jane’ series set for auction
  5. Remains of boy, son of Canonsburg native, found in mudslide
  6. Seafood study: Up to 32 percent imported to U.S. is caught illegally
  7. Navy endorses 24-hour sleep cycle for sailors
  8. Postal Service overhaul expected to appeal to Dems
  9. Latino enrollment in health care overhaul lags
  10. New commuter rail link ready to roll in central Florida
  11. SpaceX supply ship makes Easter cargo delivery to space station
Subscribe today! Click here for our subscription offers.