EBay opposes Delahunt bill that would expand states' reach on online sales tax

EBay is opposing federal legislation that would allow states to collect more sales taxes from online purchases.

The legislation, introduced last week by Rep. William Delahunt (D-Mass.), would allow states to collect online sales taxes from all retailers, and not just those with a “physical presence” in the state.

While supporters have argued it would level the playing field among businesses, eBay said the bill would stunt economic growth. “Year after year supporters of increased Internet sales taxes recommend legislation that would impose significant new costs on hundreds of thousands of online small businesses and e-commerce entrepreneurs, which is sure to harm the economy and kill small business jobs,” the company’s vice president for government relations, Tod Cohen, said in a statement. “At a time when unemployment rates are high and small businesses across the country are closing shop, we are confident that Congress will protect small internet retailers and the consumers they serve from another Internet tax scheme.”

The National Conference of State Legislatures, which supports the bill, said it could result in as much as $23 billion in new tax revenues. Seeking new revenue in the tough economy, states have been pushing to remove the “physical presence” loophole, which has exempted Internet giants like eBay and Amazon.com from some taxes.

In New York, Amazon has fought in court for years to challenge a state law requiring the company to collect sales taxes for its online purchases.