Bill could ad sales tax to online retailers

By: NBC News Email
By: NBC News Email

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

The Senate is debating a bill that would require large online retailers to charge state and local sales tax.

Right now, most do not. States can only require stores to charge it if they have a physical presence in the state.

A bipartisan group of lawmakers has proposed 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.

"It is exactly the obligation we have to level the playing field and make things fair," argues North Dakota's Senator Heidi Heitkamp.

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 ten or more percent just because of this situation," explains the NRF's David French.

Online retailers are divided. Amazon supports the marketplace fairness act, while online auction house eBay opposes it. The company's president says their position is in support of 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," says John Donahoe.

State and local governments say they are the ones who are hurting. One study estimates they missed out on about $23 billion 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," says David Quam of the National Governors Association.

The White House says it hopes congress will close the loophole. The Senate is expected to vote on the bill Thursday. Its fate is less certain in the House, where some Republicans consider it a tax increase.

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