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 purchase on their tax forms, but few do.
The amendment, from Sens. Dick DurbinDick DurbinSchumer sets Monday showdown on debt ceiling-government funding bill Democrats surprised, caught off guard by 'framework' deal Senate panel advances antitrust bill that eyes Google, Facebook MORE (D-Ill.), Mike EnziMichael (Mike) Bradley EnziWhat Republicans should demand in exchange for raising the debt ceiling Senate votes to end debate on T infrastructure bill The Hill's 12:30 Report - Presented by AT&T - Biden celebrates monstrous jobs report MORE (R-Wyo.) and Lamar AlexanderLamar AlexanderThe Hill's Morning Report - Presented by Alibaba - Democrats return to disappointment on immigration Authorities link ex-Tennessee governor to killing of Jimmy Hoffa associate The Republicans' deep dive into nativism MORE (R-Tenn.), would empower states to collect taxes on online purchases.
The measure could come up this week when the Senate votes on the underlying Small Business Jobs and Tax Relief Act.
“Nothing is more important to the retail community in South Dakota than for Congress to close this loophole and pass e-fairness legislation,” Shawn Lyons, executive director of the South Dakota Retailers Association, said in a statement. “Retailers of all stripes and sizes in South Dakota need the government to get its thumb off the scale and let everyone compete on a level playing field.”
Grant Monahan, president of the Indiana Retail Council, urged Congress to act by the end of the year.
Online giant Amazon also backs the tax. The company, which has fought numerous state efforts to tax online purchases, argues that a single national framework is preferable to a patchwork of state laws.
But some conservative heavyweights and other online companies argue the tax will stifle Internet commerce.
Sen. Jim DeMint (R-S.C.) and Grover Norquist’s Americans for Tax Reform say the measure will only increase the burden on taxpayers. The National Taxpayers Union said Wednesday that it will track votes on the Durbin amendment for its congressional scorecard.
"To be clear: No Senator who claims to support taxpayers and small businesses should vote for this amendment," Andrew Moylan,vice president of government affairs for the National Taxpayers Union, said in a blog post. "There are fairer, less burdensome ways to address any real 'level playing field' issues in this area of commerce."
He argued that it is "particularly odious and contradictory" to try to add the legislation to a small business bill. Although the legislation would exempt small sellers from the online tax, he said many small businesses would likely become "ensnared in a web of higher tax-compliance overhead cost."
Auction site eBay is also lobbying Congress to reject the tax.
“EBay is opposed to the current Internet Sales Tax proposal because it would harm many thousands of entrepreneurial small-business retailers who use the Internet to stimulate economic growth, serve consumers and create jobs across America," Brian Bieron, eBay's senior director for federal government relations, said in a statement. "Any plan to expand sales taxes on the Internet should clearly exempt all small businesses so that the Internet can continue as an important growth opportunity for all small-business retailers.”