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Senate delays action on Internet sales taxes bill

An Amazon.com package is prepared for shipment by a UPS driver. Amazon at first fought the Internet sales taxes legislation but is now in support of it.

Associated Press (2010)

An Amazon.com package is prepared for shipment by a UPS driver. Amazon at first fought the Internet sales taxes legislation but is now in support of it.

WASHINGTON — Senate Majority Leader Harry Reid says senators have reached a deal to delay voting on a bill to tax Internet sales until after senators return from a weeklong vacation.

Reid says the Senate vote on passage of the bill would be May 6. A handful of senators from states without sales taxes were blocking the bill, which has widespread bipartisan support in the Senate.

The bill would empower states to require online retailers to collect state and local sales taxes for purchases made over the Internet. Under the bill, the sales taxes would be sent to the states where a shopper lives.

Sen. Ron Wyden, D-Ore., is leading the fight against the bill. Oregon, Montana, New Hampshire and Delaware have no sales taxes, though the two senators from Delaware support the bill.

"It's coercive. It requires a number of states to collect the taxes of other states thousands of miles away against their will," Wyden said in an interview. "It's discrimination because this forces some people online to carry out responsibilities that brick and mortar retailers do not have to do."

Wyden said the bill also gives an advantage to foreign retailers, which would not be covered.

The bill has already survived two procedural votes this week, getting 74 votes in favor each time.

Under current law, states can only require stores to collect sales taxes if the store has a physical presence in the state. As a result, many online sales are essentially tax-free, giving Internet retailers an advantage over brick-and-mortar stores.

Supporters say the bill is about fairness for local businesses that already collect sales taxes, and lost revenue for states. Opponents say the bill would impose complicated regulations on retailers and doesn't have enough protections for small businesses. Businesses with less than $1 million a year in online sales would be exempt.

Many of the nation's governors — Republicans and Democrats — have been lobbying the federal government for years for the authority to collect sales taxes from online sales.

The issue is getting bigger for states as more people make purchases online. Last year, Internet sales in the U.S. totaled $226 billion, up nearly 16 percent from the previous year, according to Commerce Department estimates.

The National Conference of State Legislatures estimates that states lost $23 billion last year because they couldn't collect taxes on out-of-state sales.

The bill pits brick-and-mortar stores against online services such as eBay. The National Retail federation supports it. And Amazon.com, which initially fought efforts in some states to make it collect sales taxes, also supports it.

In many states, shoppers are required to pay unpaid sales taxes when they file state tax returns. But governors complain that few people comply.

Senate delays action on Internet sales taxes bill 04/25/13 [Last modified: Thursday, April 25, 2013 9:42pm]

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