Online sales tax plan approved in US Senate

An Amazon.com package is prepared for shipment by a United Parcel Service driver in Palo Alto, California  18 October 2010 file photo Brick-and-mortar retailers say no sales taxes means online firms have an unfair competitive advantage

Related Stories

The US Senate has passed a bill that would impose sales taxes on online retailers, after brick-and-mortar shops called for "a level playing field".

The 69-27 vote to enable states to collect the taxes sends the bill to the House of Representatives, where some Republicans oppose it as a new tax.

Currently, only firms with a physical presence in a state must charge online sales taxes.

States lost nearly $12bn (£8bn) last year in sales tax on online purchases.

A new tax?

The law faces opposition in the House, where anti-tax Republicans hold considerable power, analysts say.

Start Quote

Complying and living under the tax laws of 50 states is a major undertaking”

End Quote Brian Bieron eBay

The law would not apply to retailers with less than $1m in online sales.

The measure is supported by a coalition of brick-and-mortar retailers and industry groups.

Under current law, large brick-and-mortar companies such as Walmart and Target must collect sales taxes on online purchases in all states where they have stores.

But online retailers such as eBay and Amazon are exempt, except in states where they have offices or distribution centres.

However, Amazon has so many distribution centres across the US it is often subject to state sales tax anyway, and so the world's largest online retailer supports the bill.

"With respect to state sales tax collection, Amazon.com has long supported a simplified nationwide approach that is even-handedly applied and applicable to all but the smallest volume sellers," Amazon's vice-president for global public policy, Paul Misener, wrote in a letter to senators sponsoring the bill in February.

Software provision

David French, spokesman for the National Retail Federation, said that as internet sales have grown "it's putting pressure on the brick-and-mortar competitors and it's putting pressure on state and local sales tax revenues".

"It's time for Congress to create a level playing field so that all retailers are treated fairly."

Under the proposed legislation, sales taxes, which differ in percentage from state to state, would be sent to the states where the purchaser lives.

States would have to provide free computer software to help online firms calculate sales taxes.

States would also be expected to establish a single entity to receive internet tax revenue, so that retailers do not have to send it to individual counties or cities.

But internet retailers who oppose the bill say it does not do enough to protect small online-only firms.

They say the onus of different tax laws would still rest with online firms, including small businesses.

"Complying and living under the tax laws of 50 states is a major undertaking because the process of complying with tax law goes far beyond just filling out the right forms,'' said Brian Bieron, eBay's senior director of global public policy.

"You have to deal with the fact that all of these government agencies can audit you and can question you and can actually take you into court and sue you if they think you are doing something wrong."

In the Senate, the law gained supporters from both sides of the aisle. The main sponsor, Senator Mike Enzi, is a conservative Republican from Wyoming.

He worked closely on the bill with Senator Dick Durbin, a liberal Democrat from Illinois.

Lawmakers from three states with 0% sales tax led the opposition. They said firms based in their states should not have to collect taxes for other states.

More on This Story

Related Stories

The BBC is not responsible for the content of external Internet sites

More US & Canada stories

RSS

Features

BBC © 2014 The BBC is not responsible for the content of external sites. Read more.

This page is best viewed in an up-to-date web browser with style sheets (CSS) enabled. While you will be able to view the content of this page in your current browser, you will not be able to get the full visual experience. Please consider upgrading your browser software or enabling style sheets (CSS) if you are able to do so.