Retailers confident online sales tax has votes to pass

Retail groups are increasingly confident that they have the votes to pass an online sales tax measure in the final weeks of the 112th Congress if they can secure time on the legislative calendar.

With less than five weeks to go in the year, supporters are concentrating most of their efforts on the Senate, where a measure giving states greater latitude to collect sales taxes from online purchases has a powerful backer in Majority Whip Dick Durbin (D-Ill.).

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At the same time, retail groups acknowledge that the talks over looming spending cuts and tax hikes could get acrimonious, and that Democrats and Republicans might have little appetite to deal with other measures if their negotiations run deep into December.

“I think this is a question of can we get a vote, not if it can pass,” said Jason Brewer, a spokesman for the Retail Industry Leaders Association (RILA). “We feel confident about the vote count, but there’s also not a lot of time to push this across the finish line.”

“When you end up with a major political situation like the ‘fiscal cliff,’ that overrides everything,” Rachelle Bernstein, tax counsel at the National Retail Federation, told The Hill. “I think we feel that we have a good piece of legislation pulled together, with lots of support. But there’s a decent chance politics could derail it.”

The retail groups said not getting a bill passed this year would be a blow, given that they’d have to lobby dozens of new lawmakers in a new session of Congress, which often start out slowly.

“I don’t think it’d be a setback in our vote count, but it would be certainly a setback for momentum,” Brewer said. 

An online sales tax, though not a federal revenue bill, could also get wrapped up in negotiations over a broad tax overhaul next year.

With that in mind, backers are exploring multiple avenues to get a measure passed. 

Durbin has been working with Sens. Mike Enzi (R-Wyo.) and Lamar Alexander (R-Tenn.) on the issue, and Reps. Steve Womack (R-Ark.) and Jackie Speier (D-Calif.) are the sponsors of a similar, but not identical, measure in the House.

Lawmakers could easily remain in Washington until they have to vote on a broad tax and spending deal, meaning there could be time for an online sales tax to get a standalone vote in the Senate. A measure could be tacked onto any fiscal-cliff deal negotiated between the White House and Congress.

Durbin stopped short of predicting that a measure would get enacted this year, even as he vowed to keep pushing for it.

“I think we’re close,” Durbin told reporters on Tuesday. “It’s one of those we really won’t know until we test it.

Claire Burghoff, a spokeswoman for Womack, said she also expected the Senate to take the lead on the online sales tax in the lame duck, and that staff in the House and Senate were meeting daily to try and patch up any differences. 

“We have a lot of momentum on our side right now,” Burghoff said.

Backers of a federal online sales tax measure say legislation would correct a longstanding inequity that gives online operators an advantage over local brick-and-mortar shops. 

Because of a 1992 Supreme Court decision, companies only have to collect sales taxes from consumers in states where they have a physical location. 

Both the Senate and House proposals would allow states to collect sales taxes from Internet retailers located in other states, an approach that also has been backed by prominent GOP governors, such as Chris Christie of New Jersey, who are working to balance their budgets. 

“All we want to do here in Washington is allow states to make a decision for themselves about whether and how to collect taxes,” said Alexander, himself a former governor. “To me, it’s a no-brainer.”

But prominent conservatives like Sen. Jim DeMint (R-S.C.) and the National Taxpayers Union are queasy about the proposal and say the government should instead be looking for ways to lower tax bills. 

DeMint said Tuesday that he thought it was unlikely that an online sales tax would get passed this year, but that he feared supporters might try to ram it through as they waited to deal with more big-ticket items.

“I hope not,” the South Carolina Republican told The Hill. “I don’t think it’s been vetted. I don’t think we really know the implications of getting the federal government involved with sales tax.”

The online sales tax push has also caused something of a split in the online community, with Amazon, which is now expanding into new U.S. markets, backing a federal solution. 

Opponents like eBay, however, say too many lawmakers have raised questions about the legislation for it to pass quickly as an attachment to a bigger legislative vehicle in the lame duck.

Brian Bieron, senior director of U.S. government relations for eBay, said the company sees the current proposals on Capitol Hill as “deficient when it comes protecting small businesses doing online retail.”

“There are a number of very thoughtful and well-positioned members of Congress and senators who have raised questions about changing the law on sales tax for remote online sellers, especially outside the regular congressional processes,” Bieron said. 

Steve DelBianco, executive director of NetChoice, a coalition of online retailers and Internet companies, said that even if Durbin and his allies were successful in the Senate, he believed they’d fall short in the House. 

“It would be handed over to the GOP-controlled House, where enough members recognize a new tax when they see it,” DelBianco said. 

The NetChoice executive added that, if the issue is pushed off until next year, the urgency would start to wane as Amazon continued to expand and set up separate online sales tax agreements with individual states. 

“By late 2013, Amazon will be collecting sales tax from more than half of the U.S. population, significantly reducing the impetus for new laws forcing Amazon to collect,” DelBianco said.

But the NRF’s Bernstein said the opening of this latest holiday shopping season underscored the need for legislation, as online sales take an increasing part of the retail pie.

“Online sales becoming more robust — that’s to be expected,” Bernstein said. “Online sales are going to continue to grow. The tax rules just have to be updated.”

— This story was updated at 11:00 a.m.