Traditional retailers, who already collect the tax and, therefore, appear more expensive, want e-commerce sites to play by the same rules.
“It’s becoming a very, very unfair tax,” said Rachelle Bernstein, vice president and tax counsel for the National Retail Federation, which represents both online and traditional retailers. “We think it’s time to eliminate that disadvantage.”
The tax is not new. The only difference is a federal law would allow states to require that online stores collect taxes from out-of-state customers, many of whom don’t realize they are supposed to pay it to the government on their own.
In Quill v. North Dakota, the Supreme Court ruled in 1992 that states could not force companies located outside their boundaries to collect their taxes on long-distance sales. So, currently, e-commerce sites collect taxes only from customers who buy within the state where they are located. That could mean being headquartered in a state or having an office, distribution center, sales representatives or retail outlets there.
But proponents of online sales tax say this ruling occurred before the Internet was widely used as an e-commerce tool, and therefore, it should be reconsidered.
Furthermore, this has caused confusion for online retailers, who have to figure out which states they have a “physical presence” in and what the different tax rates are for the various districts.
Experts say a federal law would lend some continuity to the situation. The issue is heating up in Congress. The Senate’s Marketplace Fairness Act and the House’s Marketplace Equity Act are similar measures. Lawmakers on both sides say they are working together to smooth out the differences.
“The essence of the two bills are very much along the same flavor,” said Mr. Womack’s spokeswoman Claire Burghoff.
Even with Congress focused on the pending “fiscal cliff,” some lawmakers believe an online sales tax bill could get passed by the end of the year.
Sen. Richard J. Durbin, Illinois Democrat and one of the original sponsors of the Marketplace Fairness Act, is optimistic about getting the bill to the floor for a vote in the lame duck session, as opposed to taking it up in a new Congress, his spokeswoman Christina Mulka said.
Daniel Head, spokesman for Sen. Michael B. Enzi, the Wyoming Republican who is sponsoring the bill, said the same thing.
“We’re still pushing the bill, looking for every opportunity to move it forward,” he added.
In the House, the prospects of getting a bill through this year are also good.
“We’ve just gained a lot of traction this year, and so we’re at a point where we can see it going through,” Ms. Burghoff said. “So having to reintroduce that legislation just takes some momentum out of the process that we have going for us right now.”