FEATURED:

Senate poised to back Internet sales tax

The Senate is expected to pass legislation this week that would empower states to tax online purchases.

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Senate Majority Leader Harry ReidHarry Mason ReidSchumer’s headaches to multiply in next Congress Democrats have a Puerto Rican problem Dem Susie Lee defeats Danny Tarkanian to retain Nevada House seat MORE (D-Nev.) has filed to end debate on the bill, which is called the "Marketplace Fairness Act." A key procedural vote is scheduled for Monday evening.

Although the bill looks to be on the fast-track for passage through the Senate, it faces a tougher battle in the House, where Judiciary Committee Chairman Bob GoodlatteRobert (Bob) William GoodlatteThe truth about illegal voting Dems race to protect Mueller probe House Dems hold emergency conference call on Sessions ouster MORE (R-Va.) says he plans to take his time scrutinizing the legislation.

Supporters argue the bill would close an unfair loophole that benefits online retailers over local brick-and-mortar stores.

“The Marketplace Fairness Act is a bill whose time has come in Congress and one that is long overdue for states, local governments and small businesses," Sen. Dick DurbinRichard (Dick) Joseph DurbinSenate GOP readies for leadership reshuffle Durbin: Republicans are making it 'as hard as possible' to vote GOP Rep. Rodney Davis wins reelection in Illinois MORE (D-Ill.), a sponsor of the legislation, said in an emailed statement, adding that he is confident the bill will clear the Senate.


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

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.

Bringing the bill directly to the Senate floor snubs Finance Committee Chairman Max BaucusMax Sieben BaucusOvernight Defense: McCain honored in Capitol ceremony | Mattis extends border deployment | Trump to embark on four-country trip after midterms Congress gives McCain the highest honor Judge boots Green Party from Montana ballot in boost to Tester MORE (D-Mont.), whose panel has jurisdiction over the issue.

Baucus has expressed concern that the legislation would violate the rights of states that have no sales tax, like his home state of Montana.

Last month, Baucus argued in a floor speech that the proposal would "require Montana employers to spend their hard-earned dollars to enforce sales taxes in other states, with absolutely nothing in return."

"This is a clear infringement on states’ rights that we cannot stand for," Baucus declared.

Sens. Kelly AyotteKelly Ann AyotteElection Countdown: O'Rourke brings in massive M haul | Deal on judges lets senators return to the trail | Hurricane puts Florida candidates in the spotlight | Adelson spending big to save GOP in midterms GOP mulls having outside counsel question Kavanaugh, Ford Pallbearers, speakers announced for McCain's DC memorial service and Capitol ceremony MORE (R-N.H.) and Ron WydenRonald (Ron) Lee WydenGrassley defends acting AG against calls for recusal Advocates draw battle lines over national privacy law Congress should pass bill to prevent stacked taxation of digital purchases MORE (D-Ore.), whose home states also have no sales tax, are rallying opposition to the measure.

But Sens. Mike EnziMichael (Mike) Bradley EnziGOP nerves on edge after Sinema takes lead over McSally Jockeying already stepping up in House leadership fights Overnight Energy — Presented by Southern Utah Wilderness Alliance — Judge upholds Obama's marine monument | GOP lawmakers worried states using water rule to block fossil fuels | Lawmakers press Trump ahead of ethanol decision MORE (R-Wyo.) and Lamar AlexanderAndrew (Lamar) Lamar AlexanderBlackburn keeps Tennessee seat in GOP hands  Overnight Health Care — Presented by Purdue Pharma — Judge urges insurers to drop challenge over non-ObamaCare plans | Azar vows to push ahead with drug pricing proposal | No increase for ObamaCare outreach budget Dems blast Trump rule changes on ObamaCare MORE (R-Tenn.), the other lead Senate co-sponsors along with Durbin, argue the bill will actually protect states' rights. They note that it would not force any state to collect taxes, and argue that states that choose to tax online purchases could lower other rates.

“Sales tax is the main source of revenue for cities, towns and counties and even the state," Enzi said in a recent statement. "It provides the money for roads, police, fire protection. If we don’t collect that revenue, they’ll have to find a new source.”

The proposal has the support of a host of GOP governors, including Chris Christie of New Jersey, Rick Snyder of Michigan and Bob McDonnell of Virginia.

But the legislation faces a long slog in the House.

In an emailed statement, Goodlatte said he is "open to considering legislation concerning this topic," but said he has concerns that would have to be addressed.

"While it attempts to make tax collection simpler, it still has a long way to go," the GOP chairman said. "There is still not uniformity on definitions and tax rates, so businesses would still be forced to wade through potentially hundreds of tax rates and a host of different tax codes and definitions."

He also expressed concern that the bill could "open the door for states to tax or even regulate beyond their borders."

The House sponsors are Reps. Steve WomackStephen (Steve) Allen WomackCongressional panel scales back bipartisan budget reform proposal Hillicon Valley: Officials prepare for fake election hack claims | Apple chief calls for tougher data rules | Lawmakers want Pentagon to probe cloud computing contract | Facebook, Twitter find no proof of Chinese meddling Overnight Defense: Saudi crown prince calls Khashoggi killing 'heinous crime' in first public remarks | Dems demand briefing on Trump leaving arms control treaty | Lawmakers want probe into Pentagon cloud computing contract MORE (R-Ark.), Jackie Speier (D-Calif.), Peter WelchPeter Francis WelchDem overtures to Trump on drug pricing worry pharma Dems warn party message lacks punch Trump unveils most aggressive action to target drug prices MORE (D-Vt.) and John Conyers (D-Mich.).

A coalition of anti-tax groups, including the Heritage Foundation, Americans for Tax Reform and Americans for Prosperity, sent a letter to members of Congress on Friday, urging them to reject the legislation.

Major retail groups, however, are lobbying intensely for the legislation.

David French, a lobbyist for the National Retail Federation, said the overwhelming Senate vote for the proposal as a non-binding resolution last month has helped to build momentum in both chambers.

"The 75 votes on the budget vote got everyone's attention," French said. "I think the House is a lot more interested in taking this up and passing it than they were before that vote."

He said his group and other supporters plan to work with Goodlatte to address his concerns and said the bill has significant support among the Judiciary Committee lawmakers.

Brian Bieron, a lobbyist for eBay, which opposes the bill, criticized the Senate leaders for bypassing the committee process.

"We're in favor of actual legislative procedure and scrutiny because we think complicated issues ought to actually go through a process where serious questions are asked and maybe things get better," Bieron said.

He also argued that the bill's small business exception is too small.

"A new Internet tax bill should not penalize or harm small businesses," he said.