The days of tax-free Internet shopping may soon be coming to an abrupt end, if two Republican senators have their way.
Sens. Mike Enzi of Wyoming and Lamar Alexander of Tennessee are currently preparing to introduce new legislation that would allow states to force Amazon.com and other out-of-state online retailers to collect sales taxes. Their bill has the backing of several key corporate retailers, including Wal-Mart Stores, Best Buy, Home Depot, and other companies that are currently required to collect sales taxes. At issue is whether online retailers should have to collect sales taxes in states where they’re making sales. Currently, online shoppers are supposed to report purchases for tax purposes but usually don’t.
“It’s time to close the online sales tax loophole,” says Jason Brewer, a vice president at the Retail Industry Leaders Association in Arlington, Va., which represents big box stores. “Amazon and companies like it are no longer fledgling startups.”
The Republican-led legislative effort has a clear precedent in legislation introduced by Senate Democrats last year. The so-called Main Street Fairness Act of 2010 was introduced by Sen. Dick Durbin (D-Ill.), and called for taxes on online purchases, under the presumption that local retail outfits are placed at a comparative disadvantage to online retailers due to discrepancies in taxation. The justification for these measures is a reprise of arguments that state tax collectors have made for at least a decade: they claim that Amazon.com, Overstock.com, Blue Nile, and other online retailers that don’t always collect taxes are unreasonably depriving states of revenue, and that they enjoy an unfair competitive advantage over local retailers that must collect taxes, according to CNET’s Declan McCullagh. (The latter argument ignores added shipping and handling charges added to online purchases that often exceed the amount of sales tax levied on purchases at local stores, making the online goods more expensive, albeit more convenient, for the consumer.)
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