By Lisa Lambert
WASHINGTON, Feb 14 (Reuters) - U.S. states could collect
millions of dollars in online sales taxes, with members of both
parties in Congress sponsoring legislation on 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 Republican Representative Steve Womack, from
Arkansas, 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, nicknamed for the colossal
Internet retailer, has languished in Congress for years.
In 1992 the Supreme Court decided the patchwork of state tax
laws made it too difficult for on-line retailers to collect and
remit sales taxes. Currently, states can only tax Internet sales
made by companies with a physical presence within state borders.
In practice, 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 to sign into law 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 turn more to handheld devices to make
purchases. In the third quarter of 2012, retail "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, both Republican and Democratic governors advocated for
the tax as a financial solution that would not require the
federal government to provide direct aid.
A leader in the Republican party, Virginia Governor Bob
McDonnell went so far as to assume the state will soon bring in
online tax revenue in 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," Deb Peters, a Republican state senator in
South Dakota, said in a statement.
States and cities say they can recoup billions of dollars
with the tax. Fitch Ratings estimates that states currently lose
out on $11 billion in revenues.
Some states are considering their own legislation. Florida
is currently 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.
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