The Senate Commerce Committee appears set next week to wade into debate over whether Congress should pass legislation authorizing states to require online retailers to collect sales taxes from their out-of-state customers.
The committee is tentatively scheduled to hold a hearing on Aug. 1 that would examine calls for legislation that would close a loophole left from a 1992 Supreme Court ruling that found states cannot require retailers to collect sales taxes from customers in states where those companies have no store or other physical facility, a committee aide said Tuesday. The ruling applied to catalog retailers at the time but has since been exploited by online stores.
Sen. Mike Enzi, R-Wyo., and Senate Majority Whip Dick Durbin, D-Ill., introduced legislation last fall that would allow states that adopt tax simplification rules included in the bill or from a state tax simplification project to require online retailers to collect sales taxes from out-of-state customers.
The bill is backed by states and small and big brick-and-mortar retailers, many of which also have major online operations. When asked Tuesday if he plans to bring the Enzi-Durbin bill to the Senate floor, Senate Majority Leader Harry Reid, D-Nev., said he wants to ensure the bill has 60 votes to overcome a likely filibuster. He said he didn't believe supporters had reached that goal yet.
In the House, a similar, though not identical bill, has been introduced by Reps. Steve Womack, R-Ark., and Jackie Speier, D-Calif. During a House Judiciary Committee hearing Tuesday to examine the Womack-Speier bill, many lawmakers expressed support for the goals of the legislation but highlighted some issues that need to be addressed before moving such legislation. These include requiring states to take even more steps to simplify their sales tax rules.
Both bills, however, are opposed by some online firms including eBay and Overstock and the Direct Marketing Association, which argue the legislation would impose a "new tax" and impose burdens on small online retailers.