Durbin introduces online tax bill, has Amazon support

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Sens. Tim Johnson (D-S.D.) and Jack Reed (D- R.I.) will co-sponsor the bill, titled the Main Street Fairness Act. Reps. John Conyers (D-Mich.) and Peter Welch (D-Vt.) will introduce a companion bill in the House.

Supporters of the bill argue it will close a loophole that allows online purchases to go untaxed, giving an advantage to online retailers over traditional, brick-and-mortar stores. 

“Our bill levels the playing field to give Main Street businesses a fighting chance,” Welch said. “When a consumer can walk into a store, try out a product and then go home and buy it online without paying sales tax, Main Street businesses and downtowns lose."

The retail trade groups National Retail Federation, International Council of Shopping Centers and Retail Industry Leaders Association support the measure.

The lawmakers argue the bill will allow state and local governments to collect more taxes and close budget shortfalls. 

“Between 2009 and 2012, states across the country, including Illinois, are expected to lose as much as $37 billion in uncollected state and local taxes on internet and catalogue sales,” Durbin said in a statement. “The Main Street Fairness Act doesn’t ask anyone to pay a single penny more in taxes. Instead, it would help governors and mayors collect taxes that are already owed.”

Amazon opposed a California online sales tax law and is leading the effort to overturn it. The online retailer, however, supports Durbin’s bill, arguing a nationwide system of sales tax collection is preferable to a patchwork of laws. 

“Amazon.com has long supported a simple, nationwide system of state and local sales tax collection, evenhandedly applied to all sellers, no matter their business model, location, or level of remote sale,” said Paul Misen, Amazon’s vice president for global public policy. 

The Computer & Communications Industry Association, a trade group, opposes the bill. 

“E-commerce has enabled businesses to broaden the scope of their activities beyond traditional geographic limitations," said Ed Black, president of CCIA. "Sadly, this bill seeks to reimpose onto e-commerce businesses the very burdens that innovation has enabled them to overcome and has given them a chance for success."

Online auction site eBay also released a statement Friday bashing Durbin's proposal.

“The giant retailers jockeying for new Internet sales taxes have national store networks that they combine with their major online sales platforms, a business model they know brings some tax collection duties," said Brian Bieron, director of government relations at eBay. 

"Forcing small businesses to take on the same costs and tax burdens as national retail businesses is unrealistic, unfair and will unbalance the playing field between giant retailers and small business retailers on the Internet.”

This post was updated on July 30th at 9:42 a.m. to include additional statements.