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Senate Vote Expected On Internet Tax Collection

Washington — The U.S. Senate is expected to vote this week on a bill that could require large Internet retailers to collect state sales taxes nationwide.

The Senate approved a nonbinding version of the Marketplace Fairness Act in a 75-24 vote last month as part of a budget amendment, and is expected to pass the measure, S. 743, as early as today.

A similar version of the bill is still pending in the House.

 Not surprisingly, online and brick-and-mortar interests have brought out their big lobbying guns to influence the outcome. In an open letter to eBay users, CEO John Donahoe called the legislation “wrongheaded and unfair,” noting that consumers will pay more at checkout and small sellers would be burdened with collecting sales taxes from more than 9,600 local jurisdictions.

Donahoe proposed that small businesses with less than 50 employees or less than $10 million in annual out-of-state sales be exempt from the law, and is urging users to send their Congressmen a prepared letter.

The bill currently exempts online sellers of less than $1 million in remote sales annually, and requires states to provide free tax-collection software. 

Advocates of the bill include the Retail Industry Leaders Association (RILA), a trade group whose membership is comprised of the nation’s largest chains, including Walmart, Best Buy, Target, Sears, Costco, Lowe’s and The Home Depot. In a statement, RILA government affairs senior VP Bill Hughes said, “The current policy, which forces competitors to play by different rules, is inherently unfair and puts Main Street retailers at a disadvantage to out-of-state, online-only competitors. The Marketplace Fairness Act levels the playing field by providing states with the authority — if they so choose — to require online sellers to collect sales taxes just like Main Street retailers do today.”, the world’s largest e-tailer, has supported a uniform e-commerce tax that precludes local jurisdictions, although the company has also secured sales-tax exemptions from a growing number of states in exchange for opening distribution centers there.