Senate votes 74-20 to move forward with online sales tax bill

The Senate voted 74-20 on Monday to end debate on proceeding to a bill that would allow states to collect online sales tax.

The Marketplace Fairness Act, S. 743, would empower states to collect taxes on purchases made online by consumers in their states. 

The strong vote to end debate suggests supporters of the bill are likely to see it win approval in the Senate this week. Its path through the House, despite the support of many GOP governors, is less clear.

Senators in states without a sales tax voiced opposition to the bill Monday, arguing it would burden retailers in their states by forcing them to collect taxes for other state governments.

“I strongly oppose this measure because it would put a serious burden on small businesses that rely on the Internet to tap into growing markets, expand their operations, and create jobs,” Sen. Jeanne Shaheen Jeanne ShaheenGOP senators: Brexit vote a wake-up call Overnight Defense: Senate rejects new FBI surveillance powers | Brexit vote looms | Push for new military aid deal with Israel Senators push vote to condemn Russia's 'reckless actions' MORE (D-N.H.) said Monday. “Mandating that small businesses collect sales taxes for an additional 46 states and 9,600 tax jurisdictions would overload these entities with bureaucracy and red tape.”

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The bill would exempt small businesses that earn less than $1 million annually from out-of-state sales. 

Under current law, states can only collect sales taxes from retailers that have a physical presence in their state. People who order items online from another state are supposed to declare the purchases on their tax forms, but few do or are even aware of the law.

“It’s only fair to the businesses across America, if they are required to collect sales tax on their sales, that those competing with them ought to do the same,” Sen. Dick DurbinDick DurbinSenate Dems link court fight to Congressional Baseball Game Dems: Immigration decision will 'energize' Hispanic voters Senate Dems rip GOP on immigration ruling MORE (D-Ill.) said ahead of the vote Monday. Durbin is a leading co-sponsor of the bill.

Senate Finance Committee Chairman Max BaucusMax BaucusWyden unveils business tax proposal College endowments under scrutiny The chaotic fight for ObamaCare MORE (D-Mont.) said the bill should have gone through committee before coming to the Senate floor, but last week Senate Majority Leader Harry ReidHarry ReidHispanic Caucus PAC looks to flex its muscles in 2016 Say NO to PROMESA, say NO to Washington overreach Overnight Finance: Wall Street awaits Brexit result | Clinton touts biz support | New threat to Puerto Rico bill? | Dodd, Frank hit back MORE (D-Nev.) decided to call up the bill anyway.

“This bill is not ready for debate on the Senate floor,” Baucus said. “It forces our small businesses to be tax collectors for other states.

“And who is policing all of this? The bill as written today, has no audit or enforcement protection.”

Those supporting the bill have called it a “states’ rights bill” because it would allow states — many of which are battling large budget deficits — to collect the revenue they need to fund state programs.

“Right now, it’s not only unfair to small businesses, but it’s costing states and localities millions in tax revenue,” said Sen. Mike EnziMike EnziJudd Gregg: The silver lining Judd Gregg: A little change Lobbying World MORE (R-Wyo.), the lead sponsor of the bill.

The Senate last month passed a non-binding budget resolution on a 75-24 vote supporting the Marketplace Fairness language. That strong bipartisan vote showed there is enough support to pass the bill. 

Most opposition to the bill has come from conservative GOP members joined by lawmakers from three states that don’t have sales tax: Montana, New Hampshire and Oregon. Delaware also doesn’t have a sales tax, but their senators didn’t oppose the bill.

Retail groups such as the National Retail Federation and the Retail Industry Leaders Association have backed the legislation, which senators have been pushing for years.

Reps. Steve WomackSteve WomackA fix for the well-intended ethanol flop House Dems interrupt votes with push for gun bill GOP lawmakers blast Obama for 'unprecedented' overreach MORE (R-Ark.), Jackie Speier (D-Calif.), Peter WelchPeter WelchDefiant Sanders tells supporters: 'You can beat the establishment' Lawmakers line up to knock ethanol mandate Hoyer sees no philosophical divide between Clinton, House Dems MORE (D-Vt.) and John Conyers Jr. (D-Mich.) have introduced companion legislation in the House.

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