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Resolution Targets Online Sales Taxes Resolution Targets Online Sales Taxes

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Resolution Targets Online Sales Taxes

Reps. Dan Lungren, R-Calif., and Zoe Lofgren, D-Calif., Wednesday introduced a nonbinding resolution calling on lawmakers to reject attempts to impose new sales taxes on small online retailers.

The resolution says Congress should not enact any legislation that would grant state governments the authority to "impose any new burdensome or unfair tax collecting requirements on small online businesses and entrepreneurs, which would ultimately hurt the economy and consumers in the United States."

States have long called on Congress to enact legislation that would allow them to require online retailers that do not have a physical presence in their states to collect sales taxes from those states' residents. States have complained that they lose billions in sales tax revenues when their residents buy from out-of-state retailers. The controversy stems from a 1992 Supreme Court decision that found retailers are not required to collect sales taxes from customers in states where they do not have a physical presence.

In response to complaints from some retailers about the burden of having to comply with differing state sales tax regimes, several states have banded together in recent years to form a compact known as the Streamlined Sales Tax Project, which is aimed at simplifying sales tax rules among the participating states. Legislation introduced last year by former Rep. Bill Delahunt, D-Mass., would have allowed states that are part of this project to require remote sellers to collect sales taxes from residents in their states.

That bill, however, was staunchly opposed by some major Internet firms.

The nonbinding resolution from Lungren and Lofgren is aimed at small online retailers, such as a solo entrepreneur who might sell products online from their House or over eBay, according to a House aide.

"The possibility of new taxes being levied on online retailers will have a negative impact on the online marketplace," Lungren said in a statement. "We should send a clear message that Congress should not burden small businesses with unfair tax schemes."

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