New Bill Would Require Online Retailers To Collect State Sales Taxes

By Lisa Kellman

A group of ten Senators proposed a bill Wednesday requiring online retailers to collect sales taxes in an effort to level the playing field for small businesses who are being out-priced by online competitors.

The effort to pass the Marketplace Fairness Act is being led by Sens. Mike Enzi (R-Wyo.), Lamar Alexander (R-Tenn.) and Dick Durbin (D-Ill.).

“For over a decade, Congress has been debating how to best allow states to collect sales taxes from online retailers in a way that puts Main Street businesses on a level playing field with online retailers,” Enzi said.

As it currently stands, remote catalog businesses and online companies are not required to collect state sales taxes as local retail stores do. Instead, Americans are responsible for voluntarily declaring online purchases on their tax return.

If this bill is passed, however, online and remote industries would collect sales taxes electronically from their customers and send the money to the customer’s individual state.

The increased tax revenue would returnan estimated $28 billion dollars to states to be utilized at their own discretion.

“The legislation addresses a states rights issue: preserving the right of states to collect, or to decide not to collect, taxes that are already owed under state law,” Alexander said.

While 24 states have already implemented a similar sales tax collection method, the act proposed would be voluntary for the remaining states.

Amazon.com and other major online retailers as well as the Conservative Union President have expressed support for the legislation. Others, like eBay, have not been so quick to jump on board.

“This is another Internet sales tax bill that fails to protect small business retailers using the Internet and will unbalance the playing field between giant retailers and small business competitors,” said eBay VP Tod Cohen in a statement, according to reports.