Senators again push for online sales tax

The nine senators on Tuesday reintroduced legislation that would allow states to collect sales taxes -- more than 9 percent in a handful of states -- from large Internet sellers with no operations in the states collecting the taxes.

The Marketplace Fairness Act is similar to legislation that was introduced but failed to pass in the past two sessions of Congress. A version of the bill passed the Senate by a vote of 69-27 in May 2013, but the House of Representatives failed to act on it.

Lawmakers have tried for more than a decade to pass an Internet sales tax. Supporters of an online sales tax say local businesses are at a disadvantage because they have to collect sales taxes, while online retailers, in many cases, do not.

The legislation is "about supporting the jobs we have in our towns," Senator Mike Enzi, a Wyoming Republican and bill sponsor, said in a statement. "It is about the people who are our neighbors who work in our local stores."

Some e-commerce groups and anti-tax lawmakers have opposed an online sales tax. A new tax system would be difficult for online sellers to comply with, and would subject them to tax audits from jurisdictions across the U.S., critics have said.

Other critics see an online sales tax as a new cost to shoppers. Most states with sales taxes have laws requiring shoppers to calculate their own online purchases and pay sales tax to the state, but only a small percentage of people comply, and states don't actively enforce those provisions.

Currently, online retailers have to collect taxes only in states where they have a physical presence, including retail stores and warehouses. Some businesses have called on Congress to change the tax rules after a 1992 Supreme Court case prohibited states from collecting sales tax from out-of-state sellers.

The court, however, left an opening for Congress to streamline sales tax collection and allow out-of-state sales tax collection.

The Retail Industry Leaders Association, a trade group, praised the bill, saying in a statement that it would end "special tax treatment afforded to online-only retailers."

Sponsors of the sales tax bill include Senators Dick Durbin, an Illinois Democrat; Heidi Heitkamp, a North Dakota Democrat; Roy Blunt, a Missouri Republican; Angus King, a Maine independent; Lamar Alexander and Bob Corker, both Tennessee Republicans; and Jack Reed and Sheldon Whitehouse, both Rhode Island Democrats.

Grant Gross covers technology and telecom policy in the U.S. government for The IDG News Service. Follow Grant on Twitter at GrantGross. Grant's email address is grant_gross@idg.com.