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Senators Seek To Shield Small Businesses From Online Sales Tax Bills Senators Seek To Shield Small Businesses From Online Sales Tax Bills

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Senators Seek To Shield Small Businesses From Online Sales Tax Bills

Sens. Ron Wyden, -D-Ore., and Kelly Ayotte, R-N.H., introduced a nonbinding resolution Wednesday that calls on the Senate to exempt small businesses from legislation that would authorize states to require Internet retailers to collect sales taxes from out-of-state customers.

"It is the sense of the Senate that 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 Internet businesses and entrepreneurs, which would ultimately hurt the economy of, and consumers in, the United States," the resolution states.

The resolution appears to target legislation being crafted by a bipartisan group of senators that would authorize states to require online retailers to collect sales taxes from customers in states where the stores have no brick and mortar building.

A 1992 Supreme Court decision found that states cannot require retailers to collect sales taxes to people in states where those retailers lack a physical presence. Since then, states have complained that they are losing billions of dollars in revenues because of the loophole, which originally applied to catalog retailers but has since been extended to online retailers.

Sens. Lamar Alexander, R-Tenn., Mike Enzi, R-Wyo., and Dick Durbin, D-Ill., were expected to introduce their online sales tax bill this week but sources say the timing could slip to next week. The Senate measure is expected to be similar, though not identical, to a bipartisan bill introduced in the House last month.

Some firms like eBay say the proposed Senate bill and the House legislation do not provide a big enough exemption for small businesses. They argue that the threshold to qualify for the exemption in both the House and Senate bills is far too low.

"Today's Senate resolution recognizes the bipartisan support for shielding small businesses expanding on the Internet from facing new tax barriers to success," eBay Vice President for Government Relations and Deputy General Counsel Tod Cohen said in a statement on the Wyden-Ayotte resolution.

"Forcing small businesses to take on the same costs and tax burdens as national retail businesses is unrealistic, unfair and will unbalance the playing field between giant retailers and small business retailers on the Internet."

Meanwhile, 126 national and state retail groups and companies wrote the Joint Select Committee on Deficit Reduction on Wednesday to urge the panel to include in its deficit reduction package a provision that would authorize states to require online retailers to collect sales taxes from out-of-state customers. The so-called super committee is charged with developing a package by Thanksgiving with more than $1 trillion in budget savings.

"As you seek solutions to address the federal budget, any final product will undoubtedly have an impact on the states, which are likewise facing their own budget crises," according to the letter signed by the American Booksellers Association, National Association of Chain Drug Stores, Retail Industry Leaders Association, National Retail Federation, and others. "Consistent with the goals of the Joint Select Committee on Deficit Reduction, Congress has an opportunity to help the states resolve their own budget shortfalls by enhancing states' rights over sales tax collection authority and in the process closing a loophole that will level the playing field for all merchants."

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