The authors of Senate legislation that would allow states to require online retailers to collect sales taxes from out-of-state customers are hoping to attach their measure to a small business tax credit bill that the Senate is debating this week.
Sens. Mike Enzi, R-Wyo., Senate Majority Whip Dick Durbin, D-Ill., and others filed a proposed amendment Tuesday to the Small Business Jobs and Tax Relief Act that includes a modified version of their Marketplace Fairness Act. The Enzi-Durbin bill seeks to close a loophole stemming from a 1992 Supreme Court decision that essentially allows online retailers to avoid collecting sales taxes from customers who live in states where those businesses have no store or other facility.
Although the initial Supreme Court decision applied to catalog sales, online retailers have exploited it in recent years. States and brick-and-mortar stores argue that the loophole gives online-only retailers an unfair advantage and has cost states billions of dollars in lost sales tax revenues.
The Enzi-Durbin bill would allow states that sign on to a tax-simplification process known as the Streamlined Sales Tax project or pass legislation that includes some tax-simplification requirements to require online retailers to begin collecting sales taxes from out-of-state customers. The proposed amendment includes some minor changes to the Enzi-Durbin bill such as clarifying who is responsible in each state for administering the sales tax collection.
Spokesmen for both Enzi and Durbin said it is still unclear when or even if the Senate will take up the proposed amendment to the small business tax bill.