Senator Dick Durbin is planning to reintroduce a comprehensive online sales tax bill during the next session of the Congress in 2013 after the proposed legislation failed to get a vote this year, according to report from The Hill, citing a statement from the senator’s spokesperson Christina Mulka.
The National Retail Federation (NRF) supports the enactment of a comprehensive online sales tax bill. The organization’s top lobbyist, David French, said the Congress does have enough time of time to act on the bill. He said, "It's no secret that time is running out."
Supporters failed to push for the online sales tax bill in the amendments of several pieces of legislation this year including the defense authorization bill and a cybersecurity bill.
Senator Durbin along with Senators Mike Enzi and Lamar Alexander proposed the Market Fairness Act, which gives states the authority to implement taxes for online purchases. The bill provides an exemption for businesses with earnings less than $500,000 per year from out-of-state sales.
Under the existing law, states are only allowed to collect taxes from retailers with offices in their territory. Amazon.com, Inc. (NASDAQ:AMZN) and other online retailers started charging online sales tax to California residents last September 15. The online retail giant is also collecting sales tax from purchases of residents from Kansas, Kentucky, New York, North Dakota, Pennsylvania, Texas and Washington.
Senator Baucus, chairman of the Finance Committee, believed the proposed Market Fairness Act should be included in the comprehensive tax reform legislation, according to an aide of the legislator. However, many some people think the senator may be reluctant to push the legislation because Montana has no statewide sales tax.
The NRF main lobbyist agreed it was a good idea to include the bill in negotiations over the tax reform to ensure its enactment next year.
Last August, Durbin argued, the Market Fairness Act would help traditional brick-and-mortar stores to compete with online retailers. He emphasized, the bill is not imposing a new tax. Durbin said, "Small businesses in my home state of Illinois don’t want a handout from Washington. They don’t want special treatment. All they want is a level playing field."
Critics of the proposed legislation believed it would stifle online commerce, while its supporters argued the additional revenues from online sales tax would help states pay for important services for residents.