Senate May Vote on Online Sales Tax

Wal-Mart and Amazon back measure to let states collect taxes on sales by retailers with no physical presence.

Senate Majority Leader Harry Reid said he is “looking at” scheduling a bill that would let states collect taxes on out-of-state sellers as the next issue on lawmakers’ agenda after pending gun legislation.

Reid, who controls the flow of legislation to the U.S. Senate’s floor, indicated in a brief interview yesterday in Washington that he hadn’t made a decision yet. A vote on the sales tax measure could come as early as next week, said a Senate Democratic aide who spoke on condition of anonymity.

The bill, backed by Wal-Mart Stores Inc. and Inc., would let states collect some of the $24 billion in revenue they lose to untaxed sales made by retailers with no physical presence in their states. EBay Inc. and anti-tax groups such as Americans for Tax Reform oppose the measure.

The Senate took a 75-24 non-binding vote in favor of the proposal on March 22, as part of its debate of a government he budget. The Senate is currently considering gun-control legislation spurred by the December shootings at a Connecticut elementary school.

“The big vote last month made it clear that sooner or later, this is going to become the law,” said Senator Lamar Alexander, a Tennessee Republican and one of the sponsors of the sales tax proposal.

Reid, a Nevada Democrat, yesterday began the process of bypassing the Senate Finance Committee and bringing the measure directly to the floor.

The committee’s chairman, Democrat Max Baucus of Montana, represents one of five states without a sales tax. He opposes the measure.

Senator Kelly Ayotte, a New Hampshire Republican and the measure’s chief opponent, said she would “fight with every procedural tool” at her disposal to thwart it.

“New Hampshire doesn’t have a sales tax, and this notion that we’re going to burden online sellers, which has been a robust area of our economy, to become the sales-tax collectors for the nation, I think it’s wrong for economic growth,” she said.

The bill includes a $1 million exemption to protect small businesses. That needs to be “improved,” said Brian Bieron, senior director of global public policy at EBay.

The bill is “threatening them with audits and litigation by tax collectors from states that are thousands of miles away from where they live, work and create jobs,” he said in a statement.

The bill is S. 743.


Bloomberg News

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