Reid: I'll 'do everything I can' for online sales tax

Reid’s comments come as online sales tax has become an increasingly discussed topic on Capitol Hill, and on the same day that the House Judiciary Committee held a hearing on a measure similar to the Senate bill.

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Right now, Internet retailers are not forced to collect sales taxes from customers in states where they do not have a physical presence, due to a 1992 Supreme Court ruling.

Retail groups, and some GOP governors, say that online shoppers already owe sales tax on their purchase, and that the current setup both hurts brick-and-mortar stores and deprives states of needed revenue. Amazon has also backed a federal solution.

“This is an issue of fairness,” Bill Haslam, Tennessee’s Republican governor, said at the Tuesday House hearing. “Comparable businesses that sell the same things are not being treated the same. Most people I talk to understand that and agree that isn't fair.”

But skeptics say that it would be a burden for smaller companies to figure out which purchases require sales tax to be collected, and what that tax should be. Conservaties like Sen. Jim DeMint (R-S.C.) also say that policymakers should be searching for ways to lower Americans’ tax bills, not force them to pay more.

“Ironically, in many states the fairness argument cuts the other way,” Steve DelBianco, the executive director of NetChoice, a coalition of groups, including eBay and Oracle, that oppose the proposal.

“A retail store on Main Street collects sales tax for just the one jurisdiction where it's located. But an online retailer operating right upstairs must collect and remit for each of the local towns and counties whenever it ships within the state.”

At Tuesday’s hearing, lawmakers sounded open to the current proposal, but also suggested the bill’s provisions to exempt small businesses might need to be tweaked. House members also examined how software to help small businesses collect sales tax revenue could be improved.

“This can be improved. The bill isn’t perfect,” said Rep. John Conyers (Mich.), the ranking Democrat on the Judiciary panel, said of the proposal from Reps. Steve WomackStephen (Steve) Allen WomackGOP budget chair may not finish her term Jockeying begins in race for House Budget gavel Trump reopens fight on internet sales tax MORE (R-Ark.) and Jackie Speier (D-Calif.)

“Most bills when they’re finished, they’re not perfect – much less when they start out.”

DelBianco also said Tuesday that the current $1 million exemption in the current House bill was far too low, and would hurt businesses trying to meet payroll and other business expenses.

The Senate bill has an even lower exemption of $500,000 in yearly remote sales.

“Any bill to enable sales tax collection from remote vendors should contain a robust small seller exception,” Rep. Lamar Smith (R-Texas), the panel’s chairman, said in his opening statement.

The Senate Commerce Committee is scheduled to hold a hearing next week on that chamber’s online sales tax proposal.

But even as supporters of the bills claim momentum, it remains to be seen whether their proposal can get enacted this year, with so-called “fiscal cliff” issues expected to take center stage on Capitol Hill.

Durbin has said that he believes Democratic support for the measure is pretty solid in the Senate, and that around 15 or 20 Republicans would be needed to back the bill.