U.S. Senate wants tax money from online retailers

Congress could force Internet retailers to collect sales taxes under a bill that overwhelmingly passed a test vote in the Senate on Monday.
Associated Press
Apr 23, 2013

 

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 a big advantage over brick-and-mortar stores.

The bill would allow states to require online retailers to collect state and local sales taxes for purchases made over the Internet. The sales taxes would be sent to the states where shoppers live.

The Senate voted 74 to 20 to begin debating the bill. If that level of support continues, the Senate could pass the bill as early as this week.

Supporters say the bill is about fairness for businesses and lost revenue for states. Opponents say it 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.

"I believe it is important to level the playing field for all retailers," said Sen. Mike Enzi, R-Wyo., the bill's main sponsor. "We should not be subsidizing some taxpayers at the expense of others."

In many states, shoppers are required to pay unpaid sales tax when they file their state income tax returns. However, states complain that few people comply.

"I do know about three people that comply with that," Enzi said.

President Barack Obama supports the bill, but its fate is uncertain in the House, where some Republicans regard it as a tax increase. Heritage Action for America, the activist arm of the conservative Heritage Foundation, opposes the bill and will count the vote in its legislative scorecard.

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, said Dan Crippen, executive director of the National Governors Association. Those efforts intensified when state tax revenues took hit from the recession and the slow economic recovery.

"It's a matter of equity for businesses," Crippen said. "It's a matter of revenue for states."

The bill pits brick-and-mortar stores like Wal-Mart 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, supports it, too.

"Amazon.com has long supported a simplified nationwide approach that is evenhandedly applied and applicable to all but the smallest volume sellers," Paul Misener, Amazon's vice president of global public policy said in a recent letter to senators.

On the other side, eBay has been rallying customers to oppose the bill.

"I hope you agree that imposing unnecessary tax burdens on small online businesses is a bad idea," eBay president and CEO John Donahoe said in a letter to customers. "Join us in letting your Members of Congress know they should protect small online businesses, not potentially put them out of business."

The bill is also opposed by senators from states that have no sales tax, including Sen. Max Baucus, D-Mont., and Sen. Kelly Ayotte, R-N.H.

"Supporters of this online sales tax bill are trying to muscle it through before senators find out how disastrous it would be for businesses in their states," Ayotte said. "I will fight this power grab every step of the way to protect small online businesses in New Hampshire and across the nation."

Baucus said the bill would require relatively small Internet retailers to comply with sales tax laws in thousands of jurisdictions.

"This legislation doesn't help businesses expand and grow and hire more employees," Baucus said. "Instead, it forces small businesses to hire expensive lawyers and accountants to deal with the burdensome paperwork and added complexity of tax rules and filings across multiple states."

But Sen. Dick Durbin, D-Ill., said the bill requires participating states to make it relatively easy for Internet retailers to comply. States must provide free computer software to help retailers calculate sales taxes, based on where shoppers live. States must also establish a single entity to receive Internet sales tax revenue, so retailers don't have to send them to individual counties or cities.

"We're way beyond the quilt pen and leger days," Durbin said. "Thanks to computers and thanks to software it is not that complex."

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Follow Stephen Ohlemacher on Twitter: http://twitter.com/stephenatap

 

Comments

JERRY from SANDUSKY

Might as well shop locally or order from stores it will cost the same......

reporter54

I thought they already did this. I have paid sales tax online many times before.

tk

You pay sales tax if you buy from a store that has stores in your state. If there is no physical store in your state, you do not pay sales tax.

reporter54

Businesses with less than $1 million a year in online sales would be exempt.

eriemom

Quill is a feather. Quilt is on a bed.

SamAdams

Hah. And "ledger" is misspelled, too. Another awesome job from the award-winning Sandusky Register!

Roger15

Is it really THAT hard to see?? This is about tracking and control, not "tax". The Federal Reserve should just conjur up additional electronic credits for FEDGOV and leave it at that. Shheesh.....

SamAdams

It's about more than tracking and control, though you're right about that (more on the businesses than on the buyers, but with components of both). It's about taking as much money as possible from as many as possible so that government can continue to waste it.

Because state taxes are dramatically different from state-to-state, and because local taxes are often quite different from county-to-county or town-to-town, this will prove a logistical nightmare at BEST and doubtless require thousands MORE pages in the tax code. That means that, in addition to taxes, businesses will have to figure out how to comply with those taxes. They're going to have to spend serious dollars to do that. Businesses will go out of business; prices on those remaining will go up. And once again, the taxpayer and the businessman get shafted while the government continues to feed at the trough. Nice.

coasterfan

I think it's about leveling the playing field, so that all companies play by the same rules. I understand that this philosophy is against everything Republicans stand for, so you're welcome to disagree, Sam...

MiddleRight

Coasterfan, thanks for again showing your undying Democrat bias and lack of reading comprehension.
Note that the bill's main sponsor is a Republican.
"I believe it is important to level the playing field for all retailers," said Sen. Mike Enzi, R-Wyo., the bill's main sponsor. "We should not be subsidizing some taxpayers at the expense of others."

The Big Dog's back

Actually this is another way not to tax the rich.

Roger15

Well, you're right, Sam. This will not end well.........

http://www.zerohedge.com/news/20...

ZH gets it

luvblues2

I hope that Abraham Lincoln is not resting in peace.

Nemesis

Lincoln would have loved this. He presided over some of the greatest expansions of government power and taxation in this nation's history, including the first income tax. He also threatened to imprison the entire Supreme Court if they published their ruling affirming the right to habeas corpus.

luvblues2

Agreed, Nemesis.

Pterocarya frax...

If I am not mistaken, that liberal of a governor, Kasich, had a similar proposal in his budget he offered up, to go along with taxing almost all sales that weren't already subject to sales tax (with a few exceptions), and a severance tax on fracking.

I can't recall whether the house stripped the online tax portion out of their version of the budget bill when they got rid of the expanded sales tax and drilling severance tax.

coasterfan

Kasich is liberal? What color is the sky in the world where you live?

Pterocarya frax...

That was meant to be a joke, but Bill Batchelder and his merry band wingnuts in the State house of representatives must see him that way. They couldn't run away fast enough from those proposals.

Roger15

And in other news; Nanny Bloomberg indicates the need to change the "interpretation" of the Constitution, whatever that means.

http://politicker.com/2013/04/bl...

That is all.....,.

Contango

Enjoyed the first comment:

"We're going to suspend your rights to protest, bear arms, privacy, and trial by jury."
"Why?"
"To protect you from terrorists."
"Why do we need to be protected from terrorists?"
"They hate you for your freedom."

Pres. Lincoln also suspended many individual rights in order to help "save the Union." How ironic.

luvblues2

Lincoln took away states rights and gave them to the federal gov't.

Contango

"In many states, shoppers are required to pay unpaid sales tax when they file their state income tax returns. However, states complain that few people comply."

And how many govt. and tax payin' lovin' liberals are steppin' up and payin' sales taxes for their online purchases? Show of "left" hands! :)

It's a States' Rights issue.

Amazon wanted to build a distribution center in TX and so the state made a deal with 'em to begin collecting sales tax for online purchases.

luvblues2

It's a buncha BS about Lincoln freeing the slaves. That was NOT the reason for the civil war. It was politics then as it is now. The civil war just gave the federal gov't more power and made ALL of us slaves to DC.

JACKEL

It would have been to his advantage to not pass the 13th Amendment.John wouldn't have been so PO'd

KURTje

Everyone wants this....unlike background checks?

Nor'easter

Unintended Consequences of another bad decision.

The Hero Zone's picture
The Hero Zone

While I unfortunately don't come close to the million dollar threshold recommended in this bill, I still don't like it. Perhaps it wouldn't be as controversial if we moved to a national sales tax instead of income tax, but as it is now (and the speed at which it is being pushed through) it makes me very uncomfortable. I completely understand the intention behind it, but everything beyond that is rather convoluted and leaves things up to imposed "black boxes" to collect, monitor, etc. all that stuff. It seems to leave a great many questions unanswered and if that is the case can leave a bad taste behind even for otherwise good legislation.

Roger15

As a general thing, "otherwise good legislation" is rare in Foggy Bottom....

2cents's picture
2cents

I see a double edged sword here. I try to buy local for convenience, save shipping, support local stores as well. Unfortunately the big box store has just about wiped out the smaller family owned stores. On another note I shop on line for a wider variety of products and I am willing to pay freight over sales tax for items I cannot buy locally and in many cases the places I buy from must hold a lot more inventory so as to have that wide variety for me to choose from. Will this shift an unfair advantage to the so called brick and mortar store because an online store may not have store front expenses yet they have a huge warehouse and must stock a huge amount of product? Just asking!

Nemesis

No, because the online store enjoys economies of scale - it's all about volume. You may be the only person in this area that wants that item, but there are a couple thousand nationwide who want it. The online store can reach ALL of those people, spreading the administrative cost of stocking the item across all those customers.

Why should we pay Ohio sales tax on something bought from New Mexico? Ohio didn't do anything to facilitate the availability of what we bought. New Mexico did the economic development to create an environment where that item could be stocked and ready for our order. Ohio did nothing - if Ohio HAD done something, that item would be on a store shelf in our neighborhood. Why should Ohio get to enrich its coffers from the economic development efforts of another state?

What this will do is drive all the online stores into Mexico and Canada, beyond the reach of this law. A year from now we'll all be thanking NAFTA for keeping online purchases affordable.

luvblues2

Agree.

luvblues2

Our federal gov't is trying their damnedest to control the Internet. Plain and simple. Whilst we sit here and watch them take away more of our freedom to choose. And some people wonder why Internet piracy happens.