U.S. states could collect millions of dollars in online sales taxes, with members of both parties in Congress sponsoring legislation Thursday that would resolve states' decades-long struggle to tax businesses beyond their borders.
"Small businesses and states alike are suffering from the inability to collect due -- not new -- taxes from purchases made online," said Rep. Steve Womack, R-Ark., adding the legislation is a "bipartisan, bicameral, common-sense solution that promotes states' rights and levels the playing field for our Main Street businesses."
Legislation on the Amazon tax, named for the colossal Internet retailer, has languished for years.
In 1992 the Supreme Court decided the patchwork of state tax laws made it too difficult for online retailers to collect and remit sales taxes. So states can tax Internet only sales made by companies with a physical presence in the states. That means online retailers such as Amazon.com Inc. collect sales tax in some states and not in others.
The bills introduced on Thursday reconcile differences in legislation that the House of Representatives and Senate considered last year. The nearly identical details in the bills and strong bipartisan support mean the final bill could be sent to President Barack Obama this year.
Members of Congress recently assured state lawmakers they would pass a law in 2013.
In the last decade, Internet sales have gone from 1.6 percent of all U.S. retail sales to more than 5 percent, according to Commerce Department data, a proportion that will likely grow as shoppers make more purchases on handheld devices. In the third quarter of 2012, "e-commerce" sales were $57 billion, the department said.
Large Internet retailers are worried the tax could drive up the cost of doing business. They would also have to create new systems and software to collect the surcharges, adding to their costs. Amazon said in July it prefers having the tax issue resolved at the federal level.
When the 2007-09 recession caused states' revenues to collapse, Republican and Democratic governors backed the tax as a financial solution that would not require federal aid.
A leader in the Republican party, Virginia Gov. Bob McDonnell went so far as to figure online tax revenue into his recent plan for overhauling the state's transportation funding.
"The revenue states are losing out on is legally owed, but because of a pre-Internet Supreme Court ruling, states aren't able to collect it," Sen. Deb Peters, R-S.D., said in a statement.
States and cities say they can recoup billions of dollars with the tax. Fitch Ratings estimates put the states' loss at $11 billion.
Some states are considering their own legislation. Florida is debating a bill that advocates say could bring the state more than $400 million.
Small retailers, meanwhile, have said the sales tax will will allow them to compete with massive online retailers.
"While store owners collect and remit state and local sales taxes their digital competitors are off the hook -- and benefiting because of it," said David French, the National Retail Federation's senior vice president for government relations, in a statement.
Push for online sales taxes pick up steam in Congress
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Push for online sales taxes pick up steam in Congress
