Lawmakers reintroduce online sales tax bills

Bipartisan groups of lawmakers in the House and the Senate on Thursday reintroduced legislation that would make it easier for states to collect sales tax from online purchases.

“Folks shouldn’t have to pay a premium at the register just because they’re supporting a local business,” said Rep. Kristi Noem (R-S.D.), a lead sponsor of the House bill. “Unfortunately, the existing inequality means the deck is too often stacked against our Main Street retailers.”

As a result of a 1992 Supreme Court decision, states are only allowed to require online retailers to collect sales tax if the businesses have a physical presence in the state. Customers are still required to pay taxes on the purchases, but in reality few do.

{mosads}The bills would allow states to require out-of-state online retailers to collect their sales taxes, if the states simplify their tax laws.

An earlier version of the Senate bill passed the chamber in 2013. But efforts on online sales tax legislation have stalled in the past, in part because House Judiciary Committee Chairman Bob Goodlatte (R-Va.), whose panel has jurisdiction over the matter, is interested in taking a different approach to the issue.

Sponsors of the bills argue that the legislation helps provide a level playing field for brick-and-mortar retailers. They also said state and local budgets are suffering due to their difficulties in collecting sales taxes from internet purchases.

Sen. Mike Enzi (R-Wyo.), a lead sponsor of the Senate bill, said the measure “is about supporting jobs and services we have in our towns, while ensuring states have the ability to collect taxes they are owed, if they choose to.”

Retail groups also praised the reintroduction of the legislation.

“These important measures will fix an outdated tax loophole that currently gives online retailers a price advantage of up to 10 percent over brick-and-mortar stores, has shortchanged communities on much-needed sales tax revenue and overcomplicated our country’s current sales tax system,” said Tom McGee, president and CEO of the International Council of Shopping Centers.

Other sponsors of the House bill include Reps. John Conyers (D-Mich.), Steve Womack (R-Ark.) and Jason Chaffetz (R-Utah). In addition to Enzi, sponsors of the Senate bill include Sens. Dick Durbin (D-Ill.), Lamar Alexander (R-Tenn.) and Heidi Heitkamp (D-N.D.).