Sen. Dick Durbin, D-Ill., said he plans to introduce a bill on Friday requiring online retailers to collect state sales taxes, closing what brick-and-mortar retailers have long said is a "loophole" that gives companies such as Amazon and eBay an unfair advantage.
His bill would revisit a 1992 Supreme Court ruling that states cannot force Internet retailers to collect sales taxes from customers unless the company has a physical presence in the state. The bill would let states collect sales taxes based on where the customers live, rather than where the retailer is located.
Similar bills have been introduced in previous years. States like the plan because they would collect extra cash in a tough year for balancing budgets.
"The Main Street Fairness Act doesn't ask anyone to pay a single penny more in taxes. Instead, it would help governors and mayors collect taxes that are already owed," Durbin said earlier this year when he announced his plan.
"Between 2009 and 2012, states across the country, including Illinois, are expected to lose as much as $37 billion in uncollected state and local taxes on internet and catalogue sales. From 2005 to 2010 the state of Illinois estimated it lost $153 million each year."
Major retailers were pleased to see their issue move forward.
"This is a solid first step toward closing this loophole and getting government out of the business of picking winners and losers. We'll be working in the weeks and months ahead to build support for a bipartisan solution," said Jason Brewer, vice president of communications and advocacy at the Retail Industry Leaders Association, which includes Wal-Mart and Target.