published Tuesday, May 7th, 2013

U.S. Senate passes Internet sales tax bill


by Chris Carroll
Poll
Should Internet transactions be subject to sales tax?

GOP SPLITS OVER ONLINE SALES TAX

Area senators overwhelmingly supported a bill that would allow states to compel many online retailers to collect sales tax. They found themselves at odds with prominent national Republicans.

VOTING IN FAVOR

Sen. Lamar Alexander, R-Tenn.

Sen. Bob Corker, R-Tenn.

Sen. Saxby Chambliss, R-Ga.

Sen. Johnny Isakson, R-Ga.

Sen. Jeff Sessions, R-Ala.

Sen. Richard Shelby, R-Ala.

VOTING AGAINST

Sen. Ted Cruz, R-Texas

Sen. Jeff Flake, R-Ariz.

Senate Minority Leader Mitch McConnell, R-Ky.

Sen. Rand Paul, R-Ky.

Sen. Marco Rubio, R-Fla.

Source: Senate records

VIDEO

This story is featured in today's TimesFreePress newscast.

WASHINGTON — Get ready, Amazon hounds and eBay fiends of America: Start Googling "Internet sales tax."

The phrase got closer to reality Monday thanks to some rare bipartisan consensus in a gridlocked Capitol. Senators voted 69-27 on a bill that would give states the ability to force all Internet retailers to collect sales taxes that online shoppers currently must pay but largely don't.

Those same retailers then would be forced to remit the proceeds to the state where the shopper lives.

The Marketplace Fairness Act now heads to the House, where passage hinges on whether suspicious Republicans believe collecting an already-owed tax amounts to a new one.

In floor debate Monday, Sen. Lamar Alexander, a Tennessee Republican and a key player in the bill's rise, found himself fighting a new generation of conservatives who said the bill creates onerous regulations for small businesses dealing with a lukewarm economy.

Among Alexander's foes was Sen. Ted Cruz, a tea party Texas Republican whose name has been mentioned in 2016 presidential buzz.

"I believe the Senate should treat the Internet as a safe haven," Cruz said, adding that "mom-and-pop retailers" can't afford "accountants and lawyers and people designed to deal with" the bill's requirements.

But Alexander noted the bill exempts online businesses that haven't cleared $1 million in annual sales.

That argument helped the bill pass despite opposition from Cruz, Sen. Marco Rubio, R-Fla. and other young conservatives who staunchly opposed what they said constitutes a new tax.

Sen. Bob Corker, R-Tenn., and the Republican quartet from Alabama and Georgia joined Alexander in supporting the bill. In all, 21 Republicans voted in favor while 22 opposed.

Across the aisle, an unlikely Alexander ally -- Senate Majority Whip Richard Durbin, the chamber's No. 2 Democrat -- thanked the former Tennessee governor, adding that tabling the bill would hurt brick-and-mortar retailers that already must collect sales tax at the cash register.

Durbin said only one in 20 Illinois residents obey current law and self-report sales taxes on Internet purchases.

"It's a tax that some people are paying and other people aren't, even though they owe it," Alexander added.

Lawmakers from several states that don't have sales tax -- Alaska, Delaware, Montana, New Hampshire and Oregon -- objected to the fact that businesses may be required to chase down sales tax rates "thousands and thousands of miles away," as Sen. Ron Wyden put it.

"This steers the Internet toward a dangerous path," the Oregon Democrat said.

But again and again, supporters pointed to language within the 11-page bill that requires states to provide free tax-calculation software to online retailers. Alexander compared the software's user-friendliness to "looking up the weather on the computer."

As expected, trade groups representing brick-and-mortar retailers praised Senate passage.

"Retailers compete for customers on many different levels, ... but they cannot compete on sales tax," National Retail Federation Board Chairman Stephen I. Sadove said. "Congress needs to address this sales tax disparity and allow retailers to compete freely and fairly."

Internet giant and Chattanooga employer Amazon also supports the legislation. But its fellow online titan finds itself on the other side.

"EBay will continue to focus on bringing greater balance to the legislation by protecting small businesses with less than $10 million in sales or fewer than 50 employees," said Brian Bieron, the company's senior director of global public policy.

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