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Senators Re-Introduce Online Sales Tax Bill

Online retailers that last year breathed a sigh of relief after online sales tax legislation stalled in Congress are once again on tenterhooks.

A bipartisan group of nine senators on Tuesday reintroduced legislation that would allow states to collect sales tax from major online retailers that don’t have a physical location within their borders. The group says this would level the playing field for local brick-and-mortar retailers.

Efforts to pass a tax failed last December, when House Speaker John Boehner did not bring the Marketplace Fairness Act up for a vote during the last session of Congress.

“The Marketplace Fairness Act is about supporting the jobs we have in our towns. It is about the people who are our neighbors who work in our local stores,” Senator Mike Enzi, a Wyoming Republican and bill sponsor, said in a statement. “It’s time to give states the right to enforce their own laws without having to get permission from Washington.”

Lawmakers have tried for more than a decade to pass an Internet sales tax. A version of the Marketplace Fairness Act passed the Senate by a vote of 69-27 in May of 2013, but top Republicans opposed it.

Currently, states are barred from collecting sales taxes from out-of-state sellers due to a 1992 Supreme Court decision and e-tailers have to collect taxes only in states where they have retail stores and warehouses. And while most states with sales tax have laws requiring shoppers to calculate and pay taxes on their own online purchases, it’s not actively enforced.

While the Marketplace Fairness Act does not impose any new taxes, supporters say it would correct an unfair advantage that online sellers have over brick-and-mortar shops.

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The Retail Industry Leaders Association (RILA) said in a statement that the bill would end “special tax treatment” given to online-only retailers. “All retailers deserve a fair shot to compete in the free market without the government’s thumb on the scale,” said Joe Rinzel, RILA’s senior vice president for government affairs.

Likewise, the National Retailers Federation (NRF) said that retailers should be allowed to compete for customers and sales on price, service and selection and “not forced to compete on whether or not they collect state and local sales tax.”

Betsy Laird, senior vice president of global public policy for the International Council of Shopping Centers (ICSC), echoed this sentiment. “With 60 votes in the Senate, it is now up to the House to move forward with legislation. We believe that this is the year they will finally stand up for local businesses that create jobs and support our communities.”

Critics, however, say it would be difficult to comply with as online sellers would be burdened with 9,600 separate taxing jurisdictions, each with its own unique definitions, holidays and rates.