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Online internet shopping tax up for debate

MGN Online
Tuesday, April 23, 2013 - 8:23pm

Online shoppers could soon find themselves paying more for their purchases.

Online shopping has an added perk; the likelihood state and local sales taxes won't be included.

States can only require stores to charge it if they have a physical presence in the state. 

Now a bipartisan group of lawmakers is proposing a bill that would change the law and require all companies making over $1 million a year to charge sales taxes on all out-of-state purchases, including the internet.

"It is exactly the obligation we have to level the playing field and make things fair," said Sen. Heidi Heitkamp of North Dakota.

The National Retail Federation argues the current rules put brick and mortar stores at a disadvantage. 

"Online retailers - who do not collect sales taxes - can sometimes undercut the price a brick and mortar retailer can charge by 10 or more percent just because of this situation," said NRF Government Relations representative David French.

Online retailers are divided. Amazon supports the Marketplace Fairness Act; EBAY opposes it.
Company President and CEO John Donahoe believe it will hurt small merchants who use their site. 

"The burden of collecting sales tax from 9,600 tax jurisdictions on interstate transactions - we think - is going to be cumbersome and ultimately hurt them," said Donahoe.

Senator Mitch McConnell agrees with Donahoe.
"The federal gov. should find ways to help not hurt these folks," he said.

State and local governments say they are the ones who are hurting..

One study estimates missing out on about $23 billion in sales tax revenue last year. 

"Every dollar that we don't have - is a dollar that needs to be found through a cut or increases taxes," said National Governors Assoc. Representative David Quam.

The Senate is expected to vote on the bill this Thursday.

Its fate is less certain in the house where some republicans consider it a tax increase. 

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