Senators introduce Internet sales tax bill

The legislation would allow states to collect sales tax from out-of-state online sellers

Four U.S. senators have introduced legislation that would allow states to collect taxes on Internet sales, even when the seller does not have a physical presence in the taxing state.

The Marketplace Fairness Act, introduced Wednesday, would allow states that sign on to one of two tax simplification plans to collect sales taxes from Web-based sellers, reversing a widespread practice of no Internet sales taxes since the beginning of the commercial Web.

All states with sales taxes require residents who buy products from remote sellers to keep track of their purchases and pay sales taxes, but those rules are widely ignored. By some estimates, close to US$4 billion in Internet sales taxes go uncollected every year.

Under a 1992 ruling by the U.S. Supreme Court addressing catalog sales, states are now allowed to collect sales taxes from sellers with no physical presence within their borders.

The new bill would allow states to collect sales taxes from remote sellers if they sign on to the Streamlined Sales and Use Tax Agreement (SSUTA), a 12-year-old effort to meet the Supreme Court's requirements to simplify sales tax collection, or if they adopt a so-called alternative tax simplification plan.

Sponsors of the bill, similar to past efforts to allow Internet sales taxes, said the current system is unfair to small bricks-and-mortar businesses that have to charge sales tax to local customers. The legislation does not create new taxes, the senators said.

"Most small business people don't want a government handout," Senator Dick Durbin, an Illinois Democrat and cosponsor, said in a statement. "They don't want special treatment. They just want to be able to compete fairly against other businesses."

The bill allows states to decide whether they should collect Internet sales taxes, added Senator Mike Enzi, a Wyoming Republican. "This bill empowers states to make the decision themselves," he said in a statement. "If they choose to collect already existing sales taxes on all purchases, regardless of whether the sale was online or in store, they can. If they want to keep things the way they are, it's a state's choice."

Senator Lamar Alexander, a Tennessee Republican, is also a sponsor of the legislation.

Durbin is a cosponsor of a similar bill, the Main Street Fairness Act, introduced in July. Similar bills in recent sessions of Congress have failed to pass.

NetChoice, an e-commerce trade group, and eBay voiced opposition to the new bill.

"This proposal is too late for Halloween but it still scares the heck out of small online businesses," said Steve DelBianco, executive director of NetChoice. "What's scary is that this bill is a bald-faced tax increase for businesses nationwide who'd have to start paying states where they have no physical presence. Some businesses may figure out how to pass that tax along to customers, but it's still a new tax that's due from the business."

The bill will "unbalance the playing field between giant retailers and small business competitors," Tod Cohen, eBay's vice president for government relations, said in a statement.

Grant Gross covers technology and telecom policy in the U.S. government for The IDG News Service. Follow Grant on Twitter at GrantGross. Grant's e-mail address is grant_gross@idg.com.

Join the PC World newsletter!

Error: Please check your email address.

Tags U.S. SenateSteve DelBiancoe-commerceNetChoiceTod CohenDick DurbinlegislationgovernmentMike EnziinternetU.S. Supreme CourtLamar Alexanderebay

Our Back to Business guide highlights the best products for you to boost your productivity at home, on the road, at the office, or in the classroom.

Keep up with the latest tech news, reviews and previews by subscribing to the Good Gear Guide newsletter.

Grant Gross

IDG News Service
Show Comments

Most Popular Reviews

Latest News Articles

Resources

PCW Evaluation Team

Azadeh Williams

HP OfficeJet Pro 8730

A smarter way to print for busy small business owners, combining speedy printing with scanning and copying, making it easier to produce high quality documents and images at a touch of a button.

Andrew Grant

HP OfficeJet Pro 8730

I've had a multifunction printer in the office going on 10 years now. It was a neat bit of kit back in the day -- print, copy, scan, fax -- when printing over WiFi felt a bit like magic. It’s seen better days though and an upgrade’s well overdue. This HP OfficeJet Pro 8730 looks like it ticks all the same boxes: print, copy, scan, and fax. (Really? Does anyone fax anything any more? I guess it's good to know the facility’s there, just in case.) Printing over WiFi is more-or- less standard these days.

Ed Dawson

HP OfficeJet Pro 8730

As a freelance writer who is always on the go, I like my technology to be both efficient and effective so I can do my job well. The HP OfficeJet Pro 8730 Inkjet Printer ticks all the boxes in terms of form factor, performance and user interface.

Michael Hargreaves

Windows 10 for Business / Dell XPS 13

I’d happily recommend this touchscreen laptop and Windows 10 as a great way to get serious work done at a desk or on the road.

Aysha Strobbe

Windows 10 / HP Spectre x360

Ultimately, I think the Windows 10 environment is excellent for me as it caters for so many different uses. The inclusion of the Xbox app is also great for when you need some downtime too!

Mark Escubio

Windows 10 / Lenovo Yoga 910

For me, the Xbox Play Anywhere is a great new feature as it allows you to play your current Xbox games with higher resolutions and better graphics without forking out extra cash for another copy. Although available titles are still scarce, but I’m sure it will grow in time.

Featured Content

Latest Jobs

Don’t have an account? Sign up here

Don't have an account? Sign up now

Forgot password?