May 7, 2013

U.S. Senate passes bill letting states tax online sales

By Stephen Ohlemacher / The Associated Press

(Continued from page 1)

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Sarah Davis, co-owner of Fashionphile.com, poses with her bags in a company warehouse in the Carlsbad, Calif. The Internet company sells rare, vintage, and discontinued previously owned bags and is facing the complicated task of dealing with new state regulations on Internet sale taxes.

The Associated Press

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Many 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 government estimates.

States lost a total of $23 billion last year because they couldn't collect taxes on out-of-state sales, according to a study done for the National Conference of State Legislatures, which has lobbied for the bill. About half of that was lost from Internet sales; half from purchases made through catalogs, mail orders and telephone orders, the study said.

Supporters say the bill makes 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 it to individual counties or cities.

Opponents worry the bill would give states too much power to reach across state lines to enforce their tax laws. States could audit out-of-state businesses, impose liens on their property and, ultimately, sue them in state court.

In the Senate, lawmakers from three states without sales taxes are leading the opposition: Montana, New Hampshire and Oregon. They argue that businesses based in their states should not have to collect taxes for other states.

Delaware also has no sales tax, though Delaware's two senators support the bill.

Grover Norquist, an anti-tax advocate, and the conservative Heritage Foundation oppose the bill, and many Republicans have been wary of crossing them.

Even so, the issue has a bipartisan flavor. The main sponsor, Sen. Mike Enzi, is a conservative Republican from Wyoming. He has worked closely with Durbin, a liberal Democrat.

In the House, Republican Speaker John Boehner has not commented publicly about the bill, giving supporters hope that he could be won over.

Rep. Bob Goodlatte, R-Va., chairman of the House Judiciary Committee, which would have jurisdiction over the bill, has cited problems with the legislation but has not rejected it outright.

"While it attempts to make tax collection simpler, it still has a long way to go," Goodlatte said in a statement. Without more uniformity in the bill, he said, "businesses would still be forced to wade through potentially hundreds of tax rates and a host of different tax codes and definitions."

Goodlatte said he's "open to considering legislation concerning this topic but these issues, along with others, would certainly have to be addressed."


 

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