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Congress

Net Sales Tax Supporters Hope For More GOP Support

February 1, 2012

Senate Majority Whip Dick Durbin, D-Ill., says he's working with other supporters to attract more Republican co-sponsors for legislation that would require online retailers to collect sales taxes in states where they have no store or other facility.

Durbin told Tech Daily Dose Wednesday that he would like to see more GOP backers for the bill to help attract the 60 votes needed on the Senate floor to overcome a likely filibuster of the legislation. Durbin is the lead Democratic co-sponsor of the legislation offered with Sens. Mike Enzi, R-Wyo., and Lamar Alexander, R-Tenn.

The bill aims to close a loophole left by a 1992 Supreme Court decision that found states cannot require retailers to collect sales taxes from customers in states where the companies do not have a physical presence. At the time, the case applied to catalog retailers but has since been exploited by Internet retailers.

"We're trying to get some more Republican cosponsors and when we reach the critical number that I think gives us assurance of passage, we'll bring this up in the Senate," Durbin said. When asked what that critical number is, he said he would like to have "perhaps" 10 Republicans sign on in support of the bill. So far, the bill has five Republican and seven Democratic co-sponsors.

The Enzi-Durbin-Alexander bill would authorize states to require Internet retailers to collect out-of--state sales taxes as long as the states either sign on to a tax-simplification project or comply with tax-simplification principles in the bill. Supporters note that the legislation does not introduce a new tax but instead makes it easier for states to collect sales taxes that are already owed.

Still, the bill will likely require consumers to pay more for some products or services they buy online. When asked if this is a difficult sell in an election year, Durbin said the bill "does make it clear that it's no new tax obligation."

The measure is supported by a growing list of companies that sell goods and services, including Amazon, which came out in support of the measure late last year despite fighting individual state efforts to address the issue.

Perhaps in an effort to help Durbin and other congressional supporters attract more backing for the bill, a large coalition of companies and groups wrote Senate Finance Chairman Max Baucus, D-Mont., on Tuesday to urge his support. The bill has been referred to his committee.

The bill "would level the playing field between brick-and-mortar and e-commerce retail businesses while assisting the states in collecting approximately $23 billion in uncollected state sales taxes that are currently due on Internet and other remote sales," according to the letter signed by such groups as the National Retail Federation and the Retail Industry Leaders Association and companies such as Amazon, Barnes and Noble, Best Buy, Target and Wal-Mart.

A similar bill has been introduced in the House. The House Judiciary Committee held a hearing on the issue last year but it is unclear if any additional action is planned.

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