News & Links/ Congress Takes on Internet Sales Tax

On Monday May 6th 2013, Congress took a step toward ending tax-free internet retail sales, as the Senate passed a bill empowering states to collect sales tax for purchases made online.

The measure got 69 yes votes and 27 no votes in the Senate.  Next the House of Representatives will address the issue.  It is anticipated that anti-tax sentiment among many Republicans may make it more difficult to pass.

Supporters of the legislation, say it is about tax fairness and that it isn’t a tax increase. Tennessee Republican Sen. Lamar Alexander. Stated “This is a tax that everybody owes but only some people pay.”

 

Opponents claim this bill builds a base for a national Internet sales tax and imposes burdensome compliance costs on small businesses.  “I fear that what we’re going to do is crush a lot of these start-ups,” said Sen. Ron Wyden, an Oregon Democrat.

The Senate bill would exempt businesses with less than $1 million in online sales, but eBay wants to raise that small-business exemption to firms with less than $10 million in sales.  States can currently only require retailers to collect sales taxes if they have some “nexus” or physical presence in the state.

Rep. Bob Goodlatte of Virginia, who chairs the Judiciary Committee which the bill would go through, has raised concerns about the complexity of complying with the bill.