Amazon.com Inc. and brick-and-mortar stores urged U.S. senatorsto pass legislation to let states collect sales taxes from onlineretailers based elsewhere, as other Internet companies said theyoppose the measure.

Federal legislation would create “an even-handed nationalframework for sales tax collection,” Paul Misener, vice presidentfor global public policy at Amazon, the largest U.S. onlineretailer, told the Senate Commerce Committee.

The legislation would let states impose new and complex taxburdens for companies that would have to comply with 9,600jurisdictions, Steve DelBianco, executive director of NetChoice, agroup backed by EBay Inc., Oracle Corp. and Facebook Inc., said inwritten testimony for a hearing today.

“Amazon and big-box chains would benefit if Congress allowsstates to impose new tax-collection burdens on their smalleronline-only competitors,” DelBianco said.

Amazon has been making tax agreements with states where it plansto expand its warehouses and shipping centers. Under a 1992 SupremeCourt ruling, Web retailers only need to remit sales taxes tostates where they have a physical presence.

Last year, the company said it would spend $500 million onfacilities and add 10,000 full-time jobs in California by December2015, ending a fight against a state law that taxes online sales.It will start remitting the levies in September if Congress doesn'tact, according to a statement from Governor Jerry Brown, aDemocrat.

The Senate is considering a bill, S. 1832, introduced by MichaelEnzi, a Wyoming Republican. Enzi told lawmakers the measure wouldclose a loophole and benefit local businesses that have to collectsales taxes while online retailers don't, according to theCongressional Record.

Enzi submitted letters of support from the National Conferenceof State Legislatures, the National Association of Counties and theU.S. Conference of Mayors.

“This bill doesn't raise taxes,” Enzi said at today's hearing.“It collects what's owed by the purchasing individual.”

Senator Jim DeMint, a South Carolina Republican, said he opposesthe measure.

“Let's be clear about what this bill does: It mandates thatonline companies with no physical presence in the state collectsales taxes for any state that demands it,” DeMint said at today'shearing. “This is a mandate on business.”

“Are they going to have to fill out a sales form and send it toevery state?” DeMint said.

Seattle-based Amazon collects levies on sales to Washingtonstate residents, as well as on transactions with customers inTexas, Kansas, Kentucky, New York and North Dakota, according tothe company.

Pressing Congress

States have pressed Congress to act for years without results,and for a decade Amazon has backed changes in federal law thatwould ease Web sales-tax collection.

“Congress should authorize the states to require out-of-statesellers to collect the sales tax already owed,” Misener, the Amazonexecutive, said in today's testimony. Technology can ease theburden of tax collection for small sellers, Misener said.

A House bill received a hearing July 24 at which JudiciaryCommittee Chairman Lamar Smith, a Texas Republican, said theConstitution doesn't allow one state to tax other states'retailers. As a result, “online retailers, who maintain a verylimited physical presence and use common carriers to fill orders,enjoy a competitive advantage over traditional retailers,” hesaid.

Smith said a bill, H.R. 3179, sponsored by Arkansas RepublicanSteve Womack, would replace the physical-presence rule with arequirement that state and local governments simplify their taxpolicies if they want to collect sales taxes from out-of-stateretailers.

Online-only companies can achieve as much as a 10 percent priceadvantage over brick-and-mortar retailers by not collecting statesales taxes, the Retail Industry Leaders Association said in aletter of support to Enzi that the lawmaker submitted toCongress.

The trade group, based in Arlington, Virginia, says itrepresents retailers including Wal-Mart Stores Inc., Target Corp.and Sears Holdings Corp.

The National Retail Federation, with board members includingexecutives from Macy's Inc. and Saks Inc., in a submission to theCommerce Committee today said Congress should pass Enzi's bill.

“All that we want is a level playing field,” David French,senior vice president for the Washington-based group, said in aninterview. “It's only certain Internet sellers that don't collectsales taxes.”

Washington-based NetChoice says Amazon is trying to suppresscompetition from smaller online merchants by requiring them tocomply with separate tax requirements in the 45 states that havesales and use levies.

Bloomberg News

Copyright 2018 Bloomberg. All rightsreserved. This material may not be published, broadcast, rewritten,or redistributed.