Senate Bill Jeopardizes Tax-Free Online Shopping

A bill that would allow states to collect sales taxes for internet purchases has passed a test vote in the Senate.

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 Senate voted 74 to 20 Monday to take up 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. The sales taxes would be sent to the states where shopper lives. Opponents say it would impose complicated regulations on retailers and doesn’t have enough protections for small businesses.

President Barack Obama supports the bill, but its fate is uncertain in the House, where some Republicans regard it as a tax increase.

The bill pits brick-and-mortar stores like Wal-Mart against online services such as Ebay. The National Governors Association and the National Retail federation support it.

Amazon.com, which initially fought efforts in some states to make it collect sales taxes, supports the bill.

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.”

This article appeared in print on page 8 of the April 23rd, 2013 edition of Hamodia.