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Congress set to vote on online sales tax plan Congress set to vote on online sales tax plan
(about 1 hour later)
The US Senate is to vote on whether to impose sales taxes on online retailers, as brick-and-mortar stores call for "a level playing field".The US Senate is to vote on whether to impose sales taxes on online retailers, as brick-and-mortar stores call for "a level playing field".
The bill, which would empower states to collect sales taxes, is expected to pass the Senate, but faces some opposition in the House.The bill, which would empower states to collect sales taxes, is expected to pass the Senate, but faces some opposition in the House.
Under current law, only firms with a physical presence in a state must charge online sales taxes.Under current law, 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.States lost nearly $12bn (£8bn) last year in sales tax on online purchases.
A new tax?
The law is expected to pass the Senate on Monday after already surviving three procedural votes.The law is expected to pass the Senate on Monday after already surviving three procedural votes.
A new tax?
But it faces opposition in the House, where some Republicans regard it as a tax increase.But it faces opposition in the House, where some Republicans regard it as a tax increase.
The law would not apply to retailers with less than $1m in online sales.The law would not apply to retailers with less than $1m in online sales.
eBay, the online auction site, wants the bill to exempt businesses with up to $10m in sales or fewer than 50 employees. The online auction site, eBay, wants the bill to exempt businesses with up to $10m in sales or fewer than 50 employees.
The measure is supported by a coalition of brick-and-mortar retailers and industry groups.The measure is supported by a coalition of brick-and-mortar retailers and industry groups.
Under current law, large brick-and-mortar firms such as Walmart and Target must collect sales taxes on online purchases in all states where they have stores.Under current law, large brick-and-mortar firms 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.But online retailers such as eBay and Amazon are exempt, except in states where they have offices or distribution centres.
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", said David French, spokesman for the National Retail Federation. However, as 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.""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.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 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.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.
Internet retailers who oppose the bill say it does not do enough to protect small online-only firms. 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.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."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.""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 has gained supporters from both sides of the aisle. The main sponsor, Senator Mike Enzi, is a conservative Republican from Wyoming.In the Senate, the law has gained supporters from both sides of the aisle. The main sponsor, Senator Mike Enzi, is a conservative Republican from Wyoming.
He has worked closely on the bill with Senator Dick Durbin, a liberal Democrat from Illinois.He has worked closely on the bill with Senator Dick Durbin, a liberal Democrat from Illinois.
But lawmakers from three states with 0% sales tax are leading the opposition. They argue that firms based in their states should not have to collect taxes for other states.But lawmakers from three states with 0% sales tax are leading the opposition. They argue that firms based in their states should not have to collect taxes for other states.