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April 26, 2013

Tax-free Internet shopping in jeopardy

WASHINGTON (AP) — Internet shoppers are moving closer to paying sales taxes for their online purchases. But the fight is far from over.

The Senate voted 63-30 Thursday to advance a bill that would impose state and local sales taxes on purchases made over the Internet. An agreement among senators delayed the Senate's final vote on passage until May 6, when senators return from a weeklong vacation.

Opponents hope senators hear from angry constituents over the next week, but they acknowledged they have a steep hill to climb to defeat the bill in the Senate.

Their best hope for stopping the bill may be in the House, where some Republicans consider it a tax increase. President Barack Obama supports the bill.

The bill would empower states to reach outside their borders and compel online retailers to collect state and local sales taxes for purchases made over the Internet. Under the bill, the sales taxes would be sent to the states where a shopper lives.

Under current law, states can only require stores to collect sales taxes if the store has a physical presence in the state. As a result, many online sales are essentially tax-free, giving Internet retailers an advantage over brick-and-mortar stores.

"We look forward to passing this landmark bill in 11 days and call on the House to stand up for America's Main Street businesses with us," Sen. Dick Durbin, D-Ill., said shortly after Thursday's vote.

Senate Democratic leaders wanted to finish work on the bill this week, before leaving town for the recess. But they were blocked by a handful of senators from states without sales taxes.

Oregon, Montana, New Hampshire and Delaware have no sales taxes, though the two senators from Delaware support the bill.

"I think it's going to be interesting for senators to get a response from constituents over this upcoming week," said Sen. Ron Wyden, D-Ore. "I'm not sure that the country knows that something like this coerces businesses all around America to collect other people's sales taxes."

The bill pits brick-and-mortar stores like Wal-Mart against online services such as eBay. The National Retail Federation supports it. And Amazon.com, which initially fought efforts in some states to make it collect sales taxes, supports it, too.

 

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