Senate votes 75-22 to advance online sales tax bill

“Internet retailers have an advantage over brick and mortar retailers,” Sen. Dick Durbin (D-Ill.) said Wednesday. “This has caused many stores on Main Streets to face competition that is unfair … so we’re trying to level the playing field.”

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

“This legislation would impose new burdens on small businesses not only in New Hampshire but actually across the country,” Sen. Jeanne Shaheen (D-N.H.) said. “Small businesses across the country — not just in non-sales tax states, such as New Hampshire, but small businesses across the country — will see their tax burdens increase.”

The bill would exempt small businesses that earn less than $1 million annually from out-of-state sales and requires states to provide retailers with software to calculate sales taxes based on a buyer’s zip code.

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.

“This issue has grown tremendously because of the explosion of Internet sales," Sen. Heidi Heitkamp (D-N.D.) said Tuesday. "Remote sellers are getting bigger, and our main street businesses continue to suffer, continue to struggle.

“Let's do this. Let's level the playing field. Let's make this responsive to those main street businesses who everyday struggle and are simply asking for justice."

Senate Finance Committee Chairman Max Baucus (D-Mont.) and others who opposed the bill said it should have gone through committee before coming to the Senate floor.

“This is a bill that — once again, as happens all-to-often in this Senate — hasn’t been run through committee, hasn’t been properly vetted, and hasn’t yet had the kinks worked out of it,” Senate Minority Leader Mitch McConnell (R-Ky.) said Tuesday. “It’s not like there aren’t other things that can be done to improve tax compliance from online shoppers — things that don’t require us to turn private businesses into tax collectors for remote state governments.”

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.

Senate Majority Leader Harry Reid (D-Nev.) warned senators Wednesday that there could be weekend work if the opposition continues to drag its feet.

“I know this sounds like me crying wolf, but this might be the time the wolf is coming,” Reid said. “If we have to be here Friday, Saturday, we’ve got to finish work on this 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 its 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 Womack (R-Ark.), Jackie Speier (D-Calif.), Peter Welch (D-Vt.) and John Conyers Jr. (D-Mich.) have introduced companion legislation in the House.