The Senate is considering The Marketplace Fairness Act, S. 743, which would empower states to collect taxes on purchases made online by consumers in their states. But some senators in states without sales tax say it would burden retailers in their states by forcing them to collect taxes for other state governments.
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.
On Wednesday, the Senate voted 75-22 to proceed to the bill and last month the body passed a non-binding budget resolution supporting the Marketplace Fairness language on a 75-24 vote.
Those votes suggest supporters of the bill are likely to see it win approval in the Senate. Its path through the House, despite the support of many GOP governors, is less clear.
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.
“The floor is not the right place to mark up a complicated statute,” Baucus said Wednesday. “This bill needs to be reviewed in a comprehensive and thoughtful manner through regular order. … This bill in not well thought through.”