April 19, 2013, 11:12 AM

Sales tax bill inches toward a vote

A vote could come soon on a bill that would force many web retailers to collect sales tax. 

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The U.S. Senate is on course to take up the Marketplace Fairness Act of 2013 next week, with a possible vote on the online sales tax bill before the week is out, the office of one of the bill’s sponsors, Senator Dick Durbin (D, IL) said yesterday.

That schedule was put in play yesterday when the Senate Majority Leader, Harry Reid (D, NV), filed cloture on a motion to proceed to the Marketplace Fairness Act, which allows states to mandate broader collection of sales tax by Internet retailers. Under cloture rules, the Senate must vote early next week on a motion to proceed with debate on the bill. Cloture rules allow the Senate limited amount of time for debating the bill and adding amendments to it, making a final vote on the bill likely by the end of next week, a spokeswoman for Durbin says.

The move to expedite action on the Marketplace Fairness Act comes after the Senate showed overwhelming support for the bill March 22, when senators voted 75-24 to back the bill in a non-binding resolution. With that kind of support, the Senate is expected to begin debate early next week with a vote “likely by the end of the week,” the spokeswoman says.

According to Durbin’s office, the bill is co-sponsored by 28 Republicans and Democrats in the Senate and 48 Republicans and Democrats in the House of Representatives.

The Marketplace Fairness Act is backed by Amazon.com Inc. and the National Retail Federation, an industry trade group dominated by major retail chains, who contend that the bill will provide a more level playing field by requiring web-only retailers to collect sales tax. If enacted into law, the bill will overturn existing federal law that says states can only mandate sales tax collection by retailers with an in-state physical presence, or nexus in legal terms, such as stores and distribution centers. Amazon, which has been expanding its number of distribution centers to about 40 throughout the U.S., is No. 1 in the Internet Retailer Top 500. 

Many web-only retail companies, including Overstock.com Inc. and eBay Inc., oppose the bill, contending that it would put an undue burden on web retailers to collect sales tax in each of the 9,500 taxing jurisdictions around the country, each of which has its own rates and rules about which items are subject to sales tax.

The bill exempts retailers that do less than $1 million in annual remote sales, or sales to customers in states where the retailer has no physical presence.

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