published Friday, February 15th, 2013

Bill gives renewed push for online sales tax


by Chris Carroll
Sen. Lamar Alexander
Sen. Lamar Alexander
Photo by Associated Press /Chattanooga Times Free Press.

WASHINGTON — Pretty soon, consumers may not be able to browse Best Buy, find their dream television and buy it on Amazon without paying sales tax.

That's because a bipartisan mix of 53 lawmakers, including both Tennessee senators, reintroduced a tweaked version of a long-sought bill that would "level the playing field" nationwide, proponents say.

Known as the Marketplace Fairness Act, the bill would allow states to require online retailers to collect sales tax on all transactions -- treatment their brick-and-mortar rivals already endure.

U.S. Sen. Lamar Alexander, a Tennessee Republican and a top sponsor, was slated to promote the bill at a Capitol Hill news conference Thursday, but he never arrived. An aide said he was unable to attend.

In a statement, the senator stressed fairness and flexibility, highlighting "states' rights." He and other supporters stressed that individual states won't have to change a thing if they disagree with its concept.

Current law requires Internet users to report online purchases and pay in-state sales tax. But virtually no one does, and Gov. Bill Haslam, R-Tenn., has said the dodgers deprive the Volunteer State of $400 million annually.

Last year, Haslam testified at a congressional hearing, imploring the U.S. House Judiciary Committee to allow states to enforce online sales tax easily.

Amazon, the Internet giant which recently opened several distribution sites in Tennessee, supports the legislation. Company officials have said they favor a national solution instead of operating county by county, where tax rates fluctuate.

But other e-commerce giants such as eBay strongly oppose the plan, joining conservatives who say passage would amount to a new tax, or at least a freshly enforced one.

"Congress should reject any Internet sales tax legislation that throws a new tax barrier in front of small businesses," said Tod Cohen, eBay's vice president for government relations.

At the news conference, Senate Majority Whip Richard Durbin, D-Ill., swatted away potential opposition, employing a rebuttal he heard a decade ago.

"I remember this argument so well - we shouldn't enforce tax collection on the Internet because the baby is still in the crib," he said. "Well the baby is grown up and walking -- in fact, running."

The dispute between so-called brick-and-mortar businesses -- described as "Main Street" and "mom-and-pop" shops at the news conference -- and online sellers dates back to a 1992 Supreme Court ruling.

Justices then declared a given state cannot compel e-retailers and other remote businesses to collect sales tax unless they have an actual physical presence in the state.

The Marketplace Fairness Act also isn't new. Last year, a bill with the same name failed to emerge from a Senate committee.

But fresh tweaks offer a smoother path to passage, lawmakers said.

For instance, a new software provision also allows online companies to easily compute sales tax, lawmakers said. And a "small business" exemption would prohibit states from collecting from retailers that can't hit a seven-figure revenue threshold.

"You don't have to worry about it until you hit $1 million in catalog or online sales in a year," said the bill's lead sponsor, Sen. Mike Enzi, R-Wyo. "In the next year, you're expected to be under it."

The threshold was $500,000 in earlier legislation, but the new number isn't enough for eBay and others.

"A meaningful small business exemption that protects all small business retailers is a must," eBay's Cohen said.

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