The Herald Bulletin

Morning Update

Nation & World

May 6, 2013

Senate bill lets states tax Internet purchases

WASHINGTON — Attention online shoppers: The days of tax-free shopping on the Internet may soon end for many of you.

The Senate is scheduled to vote Monday on a bill that would empower states to collect sales taxes for purchases made over the Internet. The measure is expected to pass because it has already survived three procedural votes. But it faces opposition in the House, where some Republicans regard it as a tax increase. A broad coalition of retailers is lobbying in favor of it.

Under current law, states can only require retailers to collect sales taxes if the store has a physical presence in the state.

That means big retailers with stores all over the country like Walmart, Best Buy and Target collect sales taxes when they sell goods over the Internet. But online retailers like eBay and Amazon don't have to collect sales taxes, except in states where they have offices or distribution centers.

As a result, many online sales are tax-free, giving Internet retailers an advantage over brick-and-mortar stores.

The bill would empower states to require businesses to collect taxes for products they sell on the Internet, in catalogs and through radio and TV ads. Under the legislation, the sales taxes would be sent to the states where a shopper lives.

The measure pits brick-and-mortar stores against online services.

As Internet sales have grown, "It's putting pressure on the brick-and-mortar competitors and it's putting pressure on state and local sales tax revenues," said David French, senior vice president of government relations for the National Retail Federation. "It's time for Congress to create a level playing field so that all retailers are treated fairly."

On the other side, eBay says the bill doesn't do enough to protect small businesses. Businesses with less than $1 million in online sales would be exempt. EBay wants to exempt businesses with up to $10 million in sales or fewer than 50 employees.

"Complying and living under the tax laws of 50 states is a major undertaking because the process of complying with tax law goes far beyond just filling out the right forms," said Brian Bieron, eBay's senior director of global public policy.

"You have to deal with the fact that all of these government agencies can audit you and can question you and can actually take you into court and sue you if they think you are doing something wrong," Bieron 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 them to individual counties or cities.

Opponents say online businesses would still have to use resources to account for the taxes they collect and to periodically send the money to each state.

Support for the legislation crosses party lines: The main sponsor, Sen. Mike Enzi, is a conservative Republican from Wyoming. He has worked closely with Sen. Dick Durbin, a liberal Democrat from Illinois.

Supporters say the bill is not a tax increase. In many states, shoppers are required to pay unpaid sales tax when they file their state income tax returns. However, states complain that few taxpayers comply.

In the Senate, lawmakers from three states without income taxes are leading the opposition. They argue that businesses based in their states should not have to collect taxes for other states.

Montana, New Hampshire, Oregon and Delaware have no state or local sales taxes, though Delaware's two senators support the bill.

Delaware has long benefited from shoppers in neighboring states visiting Delaware to take advantage of the tax-free shopping, said Sen. Chris Coons, D-Del. Tax-free Internet shopping threatens Delaware's advantage, he said.

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 Commerce Department 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 by three business professors at the University of Tennessee. About $11.4 billion was lost from Internet sales; the rest was from purchases made through catalogs, mail orders and telephone orders, the study said.

The study was done for the National Conference of State Legislatures.

 

1
Text Only
Nation & World
  • FEA - HB0121 - flu - 05 Second wave of milder flu hitting Northeast

    Months ago, the flu season seemed to be winding down. But health officials on Friday reported widespread flu-like illnesses in six states.

    April 18, 2014 1 Photo

  • NWS - HB0525 - marijuana - JM -pic (4).jpg Colorado deaths stoke worries about pot edibles

    A college student eats more than the recommended dose of a marijuana-laced cookie and jumps to his death from a hotel balcony. A husband with no history of violence is accused of shooting his wife in the head, possibly after eating pot-infused candy.

    April 18, 2014 1 Photo

  • news_skoreaferry.jpg Ferry captain arrested in South Korea disaster

    A prosecutor says the captain of the South Korean ferry that sank two days ago has been arrested.

    April 18, 2014 1 Photo

  • Clinton visit.jpg Documents: Clinton sought GOP support for health care

    Thousands of pages of documents from President Bill Clinton's White House affirm a longtime adage: The more things change, the more they stay the same.

    April 18, 2014 1 Photo

  • Student struggles to recount fatal truck-bus crash

    Most of the 911 calls from witnesses to last week's fiery truck-bus collision that killed 10 were matter of fact. Then there was the one from a passenger: With shrieks in the background, the student struggled to recount how a truck came roaring toward them.

    April 18, 2014

  • Magnitude-7.5 earthquake shakes Mexican capital

     A powerful, magnitude-7.5 earthquake shook central and southern Mexico on Friday. The U.S. Geological Survey said it was centered northwest of the Pacific resort of Acapulco, where many Mexicans are vacationing for the Easter holiday.

    April 18, 2014

  • Avalanche sweeps down Everest, killing at least 12

    An avalanche swept down a climbing route on Mount Everest early Friday, killing at least 12 Nepalese guides and leaving three missing in the deadliest disaster on the world's highest peak.

    April 18, 2014

  • news_horselesscarriage.jpg Proposed car to replace NYC horse carriages shown

    An electric car that proponents hope will replace horse-drawn carriages in New York City was presented Thursday at the New York International Auto Show, as critics expressed their distaste for the idea.

    April 18, 2014 1 Photo

  • news_homesickforprison.jpg Man said to be homesick for prison gets 3½ years

    An ex-con who spent most of his adult life behind bars on Thursday got what he said he wanted for robbing a suburban Chicago bank. The 74-year-old gets to go back to the place he called home — prison.

    April 17, 2014 1 Photo

  • Gay Marriage Utah [Duplicate] Judge asks pointed questions in gay marriage case

    A judge in Colorado who will play a pivotal role deciding whether gays should be allowed to wed in the United States asked pointed questions Thursday about whether Oklahoma can legally ban the unions.

    April 17, 2014 1 Photo

More Resources from The Herald Bulletin
AP Video
Captain of Sunken SKorean Ferry Arrested Raw: Fire Destroys 3 N.J. Beachfront Homes Raw: Pope Presides Over Good Friday Mass Raw: Space X Launches to Space Station Superheroes Descend on Capitol Mall Man Charged in Kansas City Highway Shootings Obama Awards Navy Football Trophy Anti-semitic Leaflets Posted in Eastern Ukraine Raw: Magnitude-7.2 Earthquake Shakes Mexico City Ceremony at MIT Remembers One of Boston's Finest Raw: Students Hurt in Colo. School Bus Crash Raw: Church Tries for Record With Chalk Jesus Raw: Faithful Celebrate Good Friday Worldwide Deadly Avalanche Sweeps Slopes of Mount Everest Police Arrest Suspect in Highway Shootings Drought Concerns May Hurt Lake Tourism Vermont Goat Meat Gives Refugees Taste of Home Calif. Investigators Re-construct Fatal Bus Cras Mayor Rob Ford Launches Re-election Campaign Appellate Court Hears Okla. Gay Marriage Case
Parade
Magazine

Click HERE to read all your Parade favorites including Hollywood Wire, Celebrity interviews and photo galleries, Food recipes and cooking tips, Games and lots more.
Hyperlocal Search
Premier Guide
Find a business

Walking Fingers
Maps, Menus, Store hours, Coupons, and more...
Premier Guide
Helium debate
Helium