Collins and Sen. Angus King (I-Maine) said their amendment would have given retailers and states a year to comply with the Marketplace Fairness Act, S. 743, which would empower states to collect taxes on purchases made online by consumers in their states. Currently, the bill gives 90 days for compliance.
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.
But some senators in states without sales tax, such as Montana, say it would burden retailers in their states by forcing them to collect taxes for other state governments.
“This amendment makes my case. What’s my case? My case is this bill should go to committee,” Baucus said. “There are so many problems that are not thought through. This amendment says delay for a year. [But] why delay? Because there are so many problems … Dealing with the problems in committee is the solution.”
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 nonbinding 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 later this week. But some senators from New Hampshire, Montana and Oregon are forcing the Senate to run out the clock on each procedural move, delaying the process.
A lead sponsor of the bill, Sen. Dick Durbin (D-Ill.) said his bill is about fairness for brick-and-mortar retailers that are losing business to online retailers who don’t have to collect sales tax. He said he would allow amendments from those opposing the bill, but that those senators still won't agree to allow the bill to move forward.
“We’re told any amendments that come to the floor today, there will be more objections,” Durbin said before Collins’s amendment was objected to. “I don’t think this makes this institute look very good … We’re supposed to engage in civil debate on the floor and vote.”
Senate Majority Leader Harry Reid (D-Nev.) warned senators that they would work through the weekend to complete work on the bill before leaving for a weeklong recess if those objecting did not agree to a deal sooner.