Internet Sales Tax Bill Moves Forward in Senate

By:  Raven Clabough
Internet Sales Tax Bill Moves Forward in Senate

An Obama-backed bill that would permit states to impose state and local taxes on Internet purchases will be voted on in the Senate later this week.

Legislation that would permit states to impose state and local taxes on Internet purchases is currently making its way through Congress. On Monday, after a hearty endorsement from President Obama, a Senate procedural vote of 74 to 20 moved the bill forward. The Senate will now begin debate on amendments before a final vote on the bill, scheduled to take place later this week.

Senate Majority Leader Harry Reid (D-Nev.) has received some backlash for bypassing the committee review process and bringing the bill to the table before it had a chance to be properly vetted. The move took place after he was compelled to shelve gun control legislation.

Senators Kelly Ayotte (R-N.H.), Ron Wyden (D-Ore.), Jon Tester (D-Mont.), Jeanne Shaheen (D-N.H.), Marco Rubio (R-Fla), Mike Lee (R-Utah),and Ted Cruz (R-Texas) sent Reid a letter Monday asking him to delay the legislation, which they said has the potential to “erode” states’ rights and “result in crippling compliance costs on small Internet businesses. At the very minimum," the letter continued, "we believe these concerns warrant a thorough vetting of the bill through regular order."

Senator Max Baucus (D-Mont.), chairman of the Finance Committee, also criticized Reid for bypassing his committee, which has jurisdiction over tax issues. “This bill is not ready for debate on the Senate floor," he declared. "It has not been completely thought through. It is full of unintended consequences that could seriously harm America’s small businesses."

Entitled the Marketplace Fairness Act, the bill touts itself as one that would “restore States’ sovereign rights to enforce State and local sales and use tax laws,” by granting states the authority to compel online and catalog retailers, regardless of their location, to collect sales tax at the time of the transaction. The bill requires that states be permitted that authority only after they have simplified their sales tax laws. The purpose of that single caveat is to ensure that collecting sales taxes for multiple states is not too difficult, based on Supreme Court rulings in Bellas Hess and Quill.

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