Senate panel to consider online sales tax

The Senate, Commerce and Science Transportation Committee will hold a hearing next week to examine legislation that would allow states to tax online purchases.

Committee Chairman Jay Rockefeller (D-W.Va.) is a co-sponsor of the online tax bill, the Marketplace Fairness Act. The measure is also supported by Sens. Dick Durbin (D-Ill.), Mike Enzi (R-Wyo.) and Lamar Alexander (R-Tenn.).

The House Judiciary Committee held a hearing on counterpart legislation on Tuesday.

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 purchase on their tax forms, but few do. 

The legislation is backed strongly by traditional brick-and-mortar stores, who say the current system gives an unfair advantage to online retailers. Online giant Amazon is also lobbying for the legislation, arguing that a national standard is preferable to a patchwork of state laws. Amazon reportedly has plans to dramatically expand its physical distribution centers, which would make it subject to taxes in many states under current law anyway.

Online auction site eBay and many anti-tax groups oppose the bills, saying they will stifle e-commerce and burden taxpayers.

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