Senate set to approve online sales tax bill

The Senate is poised to approve legislation that would give states greater authority to collect sales taxes on goods sold online by out-of-state retailers.

Filibuster-proof majorities have already signaled their support for the bill in a series of procedural votes, and the upper chamber is scheduled to vote on final passage of the Marketplace Fairness Act shortly after 5:30 p.m. 

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Senate passage will be seen as a major victory for retail groups and state governments, who have fought for years for a bill they say will close a long-standing loophole and return as much as $23 billion in lost revenue.

The bill would empower states to collect taxes on purchases made online by consumers in their states from out-of-state retailers. Under current law, states can only collect from companies that are physically located within their borders.

Supporters say that bipartisan Senate approval will give S. 743 momentum in the House. But even though the legislation has the support of several prominent GOP governors, the bill’s path in the Republican-controlled lower chamber remains uncertain.

Opponents, including some well-known conservative groups and the online retailer eBay, have vowed to keep up the fight in the lower chamber, and House Judiciary Committee Chairman Bob Goodlatte (R-Va.), has outlined a host of concerns about the measure.

But Goodlatte and other leading Republican lawmakers, like Budget Chairman Paul Ryan (R-Wis.), have also suggested that the current set-up leaves brick-and-mortar businesses at a disadvantage.

Some senators in states without a sales tax tried blocking progress on the bill, arguing it would burden retailers in their states by forcing them to collect taxes for other state governments. Conservatives opposing the measure say it’s “a job-killing tax hike.”

“It’s incomprehensible that the U.S. Senate is moving to raise taxes on one of the brightest sectors of our struggling economy,” Sen. Ted Cruz (R-Texas) wrote in an op-ed Monday. “But tax-hungry politicians view the Internet as yet another source of revenue to bail out their big-spending governments.”

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

In April, senators voted 63-30 to end debate on the bill. Final passage of the bill will require only a majority.

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, which is expected to go through the committee process.

This story was updated at 2:16 p.m.