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Senators renew Internet sales tax push

Senators renew Internet sales tax push
© Greg Nash

Senators seeking to give states broader latitude to charge sales taxes on Internet purchases are preparing a last-ditch effort to pass legislation through Congress before the midterm elections.

A bipartisan group of lawmakers has been pushing such a fix for years, insisting it would level the playing field between brick-and-mortar and online retailers.

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Now, Senate supporters believe they have a perfect vehicle: the Internet Tax Freedom Act, a relatively uncontroversial measure, which sailed through the House on Tuesday, that would extend a long-standing ban on state and local taxes on Internet access. 

“Why wouldn’t we?” Sen. Mike EnziMichael (Mike) Bradley EnziLummis adopts 'laser eyes' meme touting Bitcoin Senate swears-in six new lawmakers as 117th Congress convenes With Senate at stake, Georgia is on all our minds MORE (R-Wyo.), a longtime supporter of online sales tax legislation, said when asked if he planned to attach the Marketplace Fairness Act to the bill. “They’re a perfect fit.”

Enzi and several other senators released their new bill on Tuesday, which would attach the online sales tax measure to a 10-year extension of the Internet freedom bill. The House passed a permanent version of the online access bill on Tuesday.

The move sets up a potential showdown between the House, where GOP leadership and a key committee chairman have shown little interest in online sales tax legislation, and the Senate, which passed its bill more than a year ago with bipartisan support.

The Internet Tax Freedom Act expires Nov. 1, meaning providers could send out warnings about potential new taxes on online access just weeks before the election, an outcome that neither supporters nor opponents of the online sales tax legislation particularly want.

Still, Enzi said he and other backers of the online sales tax legislation, including Majority whip Dick DurbinDick DurbinGarland's AG nomination delayed by GOP roadblocks National Sheriffs' Association backs Biden pick for key DOJ role Senate coronavirus bill delayed until Thursday MORE (D-Ill.), would press ahead, despite anticipated resistance from Senate Finance Committee Chairman Ron WydenRonald (Ron) Lee WydenOvernight Health Care: Biden slams Texas, Mississippi for lifting coronavirus restrictions: 'Neanderthal thinking' | Senate panel splits along party lines on Becerra |Over 200K sign up for ACA plans during Biden special enrollment period Raimondo has won confirmation, but the fight to restrict export technology to China continues Senate panel splits along party lines on Becerra MORE (D-Ore.) and other opponents of the measure.

“That’s not taxing the Internet itself, which we’re against,” Enzi said. “That’s allowing states to collect the taxes that are due.”

The Senate’s Marketplace Fairness Act, passed in May 2013, would allow states to collect sales taxes from out-of-state retailers. Currently, states cannot enforce the collection of sales tax from retailers that do not have a physical presence in their borders. 

While sponsors said the sales tax bill would create parity between physical and online retailers, some members slammed the bill, saying it would subject small retailers to a complex maze of compliance burdens from thousands of state and local tax jurisdictions. 

Critics have also condemned the speed with which the bill moved through the Senate, and opponents on Tuesday said they saw no reason to link the sales tax and Internet access measures.

“They’re separate issues,” Wyden said, insisting that the online sales tax bill places burdens on Internet retailers that aren’t felt by brick-and-mortar stores. “The Marketplace Fairness bill as written now is contradictory to what the Internet Tax Freedom bill is all about.”

The online sales tax bill has faced more roadblocks in the House, where House Judiciary Committee Chairman Bob GoodlatteRobert (Bob) William GoodlatteBottom line No documents? Hoping for legalization? Be wary of Joe Biden Press: Trump's final presidential pardon: himself MORE (R-Va.) has called for a simpler bill than what passed the Senate.

In September, Goodlatte released a set of seven principles that any online sales tax bill must meet to be considered in the Judiciary Committee, including equal burdens for physical and online retailers and language that encourages local governments to compete on tax policy. He also held a hearing on the issue in March.

Despite the principles, hearing and pledges to work on alternative approaches to the online sales tax bill, Goodlatte has not yet brought a bill up for consideration in the Judiciary Committee. Rep. Jason ChaffetzJason ChaffetzFox News Audio expands stable of podcasts by adding five new shows The myth of the conservative bestseller Elijah Cummings, Democratic chairman and powerful Trump critic, dies at 68 MORE (R-Utah), a Judiciary Committee member, has pursued online sales tax legislation but has yet to release a measure.

Industry groups say the Senate is looking to move the online sales tax bill in the face of Goodlatte’s inaction.

“The Senate is getting ready to try to force the issue,” said David French, senior vice president for government relations at the National Retail Federation, which has aggressively lobbied Congress to pass an online sales tax bill.

The Senate sponsors of the Marketplace Fairness Act are “interested in moving the bill on any vehicle they can,” and the Internet Tax Freedom Act is a “very likely vehicle,” French said.

Still, Senate Majority Leader Harry ReidHarry Mason ReidWho is the Senate parliamentarian and why is she important? Trumpists' assaults on Republicans who refuse to drink the Kool-Aid will help Democrats The Jan. 6 case for ending the Senate filibuster MORE (D-Nev.) and Durbin would have to move the combined measure over the objections of Wyden, who is the original co-author of the Internet access bill and whose committee has jurisdiction over online sales tax issues. 

Steve DelBianco — executive director of NetChoice, which represents online companies including eBay and has lobbied against the Marketplace Fairness Act — said he hopes that Wyden will be a helpful ally in blocking the measure.

Wyden “is seen as a very popular and charismatic leader, especially on tech issues,” he said.

Reid has given Wyden more leeway, at least publicly, than the previous Senate Finance Committee Chairman, Max BaucusMax Sieben BaucusBottom line Bottom line Bottom line MORE (D-Mont.). But Democratic leaders also appear to be accepting a House plan to prop up the Highway Trust Fund, even though Wyden has a similar proposal.

DelBianco said he was confident that the House would stand strong even if the Senate succeeds in attaching the online sales tax bill.

“I think they would find a way to send it right back to the Senate,” DelBianco said. 

Still, he added, “You always have to be concerned about sending something over to the Senate and having it come back as a disaster.”

But Rep. Steve WomackStephen (Steve) Allen WomackTrust between lawmakers reaches all-time low after Capitol riots Pelosi announces lawmakers will be fined ,000 if they bypass metal detectors to House floor Cori Bush slams lawmakers who refused to go through metal detector outside House chamber MORE (Ark.), the primary GOP backer of the online sales tax legislation in the House, said the Judiciary Committee had plenty of time to craft an alternative measure.

“If it gets attached to something and comes back to us and it’s a must-pass piece [of legislation], then we have nobody to blame but ourselves,” Womack told The Hill. “The sands in the hourglass are slipping away.”

--This report was updated at 8:07 a.m.