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Web sales tax could be just a click away; Senate approves rules for Internet
Online sticker shock just got a bit closer.
Internet retailers soon could be required to collect the same sales taxes that consumers pay to their bricks-and-mortar peers, after the Senate agreed Monday to send the Marketplace Fairness Act to the floor for a final vote in coming weeks.
Taxes on Internet commerce already exist formally. When consumers buy online, they are supposed to pay the sales tax directly to the government. But most people don’t realize this because they are accustomed to brick-and-mortar stores charging the sales tax and passing it on to the state.
The Marketplace Fairness Act, sponsored by Sen. Richard J. Durbin, Illinois Democrat, and Michael B. Enzi, Wyoming Republican, would fix this quirk in the tax system by requiring most large Internet retailers to collect the tax.
“All businesses and their retail sales, all consumers and their purchases should be treated equally,” Mr. Enzi said during Senate floor debate. “Some argue the bill is a disguised attempt to create taxes. It is not. Consumers are already supposed to pay these taxes.”
Opponents say it would be an overreach by a few states and fear the system would be too complicated for Internet retailers to deal with, forcing many of them out of business.
Sen. Max Baucus, Montana Democrat and an opponent of the Marketplace Fairness Act, said senators should take more time to consider the consequences of the bill.
“This legislation is new, only recently introduced, never has been vetted,” Mr. Baucus said during floor debate. “This bill is fraught with all kinds of problems.”
The Senate agreed Monday to send the bill to the floor for a final vote in a 74-20 decision, making passage in the upper chamber almost certain.
The vote could take place as early as Wednesday, or after the Senate returns from a weeklong vacation in May.
If it passes in the Senate, the Marketplace Fairness Act then would go to the House for a vote, where there is also growing support for a bill that would make Internet retailers collect sales tax.
On Monday, the Obama administration also threw its support behind the Marketplace Fairness Act.
“This bill would eliminate the unfair advantage currently enjoyed by big out-of-state online companies over local neighborhood-based small businesses,” the White House said in a statement.
Supporters say the Marketplace Fairness Act would level the playing field for traditional retailers, which have long suffered from lost sales because their prices seem higher compared with online stores that don’t collect sales tax.
“It is critical that the tax laws do not discriminate between similar businesses based on how their products are distributed,” the National Retail Federation wrote in a letter to Senate Majority Leader Harry Reid, Nevada Democrat.
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About the Author
Tim Devaney is a national reporter who covers business and international trade for The Washington Times. Previously, he worked for the Detroit News, Grand Rapids Press, Portland Press Herald and Bangor Daily News. Tim can be reached at firstname.lastname@example.org.
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