Sens. Mike Enzi (R-Wy.) and Dick Durbin (D-Ill.) are expected to introduce an amendment to the Democratic budget resolution this week that that will allow states to collect sales tax on online retail purchases.
“We’re working overtime in pushing this, talking to our members, activating our grassroots,” Stephen Schatz, a spokesman for the National Retail Federation, said, according to CNET.
Advocates for the measure maintain that online retailers have an unfair competitive advantage over big box retailers that do collect taxes. Nearly 10,000 jurisdictions have the authority to impose taxes, but because each region has its own rules and audit procedures, complying with the requirements is no easy task for a small retailer.
The National Taxpayers Union, however, has opposed the tax, saying that a tax hike should not be furtively added to an unrelated budget bill that is likely to be voted on before the Senate breaks for Easter recess. The NTU has set up a petition, calling the amendment “a way to unleash state tax collectors on the internet,” and 15 other groups have also sent letters to members of Congress saying the Internet tax is “bad news for conservative principles and the cause of limited government,” CNET reports.
“[The proposed amendment] does nothing to address what the Supreme Court says was an unreasonable burden on interstate commerce,” Steve DelBianco, the executive director of NetChoice, said, according to CNET. “It’s an unprecedented expansion of state sales tax authority.”
The Enzi-Durbin amendment, which has 25 other supporters in the Senate, would allow state governments to collect sales tax from online retailers with more than $1 million in gross receipts. Some maintain that the amendment, which is non-binding, is designed to secure a certain number of votes which will be used to argue sufficient support for the measure when it comes up for a binding vote in the future.
In 1992, the U.S. Supreme Court ruled that out-of-state retailers were not required to collect sales tax except in the case of “nexus,” in which a company can be forced to collect tax if it has an adequate business presence, and in the sale of cigarettes, CNET reports.