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Online Sales Tax Bill Advances in Senate

Floor vote expected this week, however tougher battle in House expected

A bill aimed at narrowing the tax gap between what Internet retailers collect for a purchase versus what brick and mortar retailers must collect from buyers has taken a step forward in the Senate.

After President Obama endorsed the Marketplace Fairness Act, the Senate voted last night to begin debating the amendments and expects to actually bring the bill to the floor for a vote this week.

The bill gives states the ability to tax out-of-state online retailers, but would exempt small businesses that earn less than $1 million annually.

We’ve reported how the legislation affects radio; currently, equipment suppliers and other retailers that sell through a catalog or online must collect sales tax from customers when the seller has a direct or indirect physical presence in a state, known as “nexus” — such as a sales office, manufacturing facility or distribution center.

The Consumer Electronics Association supports the measures. CEA President/CEO Gary Shapiro said of S.743: “We urge for swift action and final passage of this common sense legislation that will end the unequal treatment of brick-and-mortar retailers by allowing states to collect sales tax that is legally owed from online retailers, removing an onerous and unfair burden from consumers.” 

A lobbyist for the Retail Industry Leaders Association said passage would mean “the playing field would soon be level for all retailers.”

However the measure faces a tougher road in the House and has split retailers; Amazon supports the bill wile eBay, Google and oppose it, for example.