Reid signals he'll bring sales tax bill to Senate floor

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 "Senator Baucus is discussing the issue with Leadership and his colleagues on the Committee," a Senate Finance Committee aide said.

"The proposal in its current form has too many unanswered questions and presents a huge burden for small businesses in Montana and across America," the aide added.

Last month, 75 senators voted for a nonbinding budget resolution amendment expressing support for allowing states to tax online purchases. Although the vote had no legal impact, it was an important demonstration of support for the proposal.

The Marketplace Fairness Act is backed by Sens. Dick Durbin (D-Ill.), Mike Enzi (R-Wyo.) and Lamar Alexander (R-Tenn.).

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 purchases on their tax forms, but few do.

The Marketplace Fairness Act would empower states to tax online purchases but would exempt small businesses that earn less than $1 million annually from out-of-state sales. 

The bill's supporters argue it would close an unfair loophole that benefits online retailers over local brick-and-mortar stores. Critics, including some online businesses and anti-tax groups, worry the legislation will be overly complicated to implement and will stifle online commerce.

David French, a lobbyist for the National Retail Federation, said he is "thrilled" with Reid's decision to move the bill to the floor.

"It's a very positive sign. It's earlier than we expected," French said. 

He said he is optimistic the bill will have a strong margin of support in the Senate, and added that a Senate vote can help build momentum in the House. 

An aide to Durbin said the sponsors of the bill are "keeping all options open in order to move the bill."

"This is one of those options," the aide explained.

But opponents of the bill expressed dismay at Reid's move. 

"The actual legislation deserves a hearing in Senate Finance where I think it would be clear to all American businesses that they would be exposed to new audits in 46 states," said Steve DelBianco, the executive director of business group NetChoice.

He said he expects the House Judiciary Committee will take a "hard look at the constitutional and interstate commerce issues" with the bill.

The sponsors of a companion bill in the House are Reps. Steve Womack (R-Ark.), Jackie Speier (D-Calif.), Peter Welch (D-Vt.) and John Conyers (D-Mich.).

— Bernie Becker contributed

—Updated at 3:54 p.m.