The U.S. Senate is joining retailers’ fight to close the Internet sales-tax loophole. In a bipartisan move, Sens. Mike Enzi (R-Wyo.) and Dick Durbin (D-Ill.) introduced new legislation intended to create an equal playing field between traditional brick-and-mortar stores and online retailers.
The Marketplace and Internet Tax Fairness Act combines a bill that would enable states to collect sales taxes from out-of-state online sellers with the House-passed Permanent Internet Tax Freedom Act, which extends a permanent ban on states taxing Internet access.
The Internet tax bill was quietly passed on Tuesday. Sen. Enzi told The Hill that the two bills are a “perfect fit.”
Currently, states cannot collect sales tax from retailers that do not have a physical presence in the state. The legislation would allow states to collect that sales tax, regardless of presence, in the 45 states that collect sales tax, and the District of Columbia. The bill is estimated to bring in $23 billion in uncollected tax revenue annually, which could be used to help balance budgets.
While critics have expressed concern about how quickly the bill was moved in the Senate, retail organizations have been eager to announce support for the legislation.
National Retail Federation (NRF) senior vice president for government relations David French, said, “The National Retail Federation applauds the introduction of this bipartisan piece of legislation that seeks to level the playing field between local, brick-and-mortar merchants and online retailers without creating or raising taxes.” He added, “We appreciate the leadership of the bill’s sponsors and thank them for renewing their commitment to sales tax fairness. The retail industry has rapidly evolved over the last two decades with e-commerce and mobile commerce, and it is time for Congress to eliminate the sales tax disparity, which disproportionally impacts community and independent retailers.”
Retail Industry Leaders Association (RILA) executive vice president for government affairs Bill Hughes, said, “Retailers support keeping Internet access tax free while closing the online loophole that essentially subsidizes online-only retailers against their brick and mortar competitors. It’s time for the government to take its thumb off the scale and give all retailers a fair shot to compete in the free market.”