Feb. 9, 2016 SIGN IN | REGISTER

Web Sales Tax Fight Heats Up

Tom Williams/CQ Roll Call
Senate Majority Whip Dick Durbin (center) has been the retail industry’s chief crusader for Congressional action on issues such as sales tax collection from online stores.

Senate Majority Whip Dick Durbin seems to have a knack for getting himself in the middle of big business brawls.

The Illinois Democrat was still celebrating his latest victory Tuesday in his years-long fight with banks over debit card swipe fees as his opponents in another high-stakes battle prepared their next attack. This time, it’s on his proposal to require online retailers to collect sales tax just like their storefront counterparts.

For almost a decade, retailers have pleaded for Congressional action on both issues, and in the past year Durbin has emerged as the industry’s chief crusader.

Retailers are pressuring the super committee to include language based on the online sales tax bill Durbin introduced this summer in its deficit reduction plan.

Durbin has been working with Republican Sens. Lamar Alexander (Tenn.) and Mike Enzi (Wyo.), who are expected to drop bipartisan legislation as soon as today as members of the American Booksellers Association and several other organizations representing independent business blanket Capitol Hill in support of the idea.

Meanwhile, a host of powerful opponents — the most prominent of which is eBay Inc. — is crafting carefully timed attacks. Sens. Ron Wyden (D-Ore.) and Kelly Ayotte (R-N.H.) are preparing to introduce a counterproposal that seeks to protect small businesses from any new tax regime.

The Wyden-Ayotte measure, which is expected to be nonbinding, would affirm that no federal legislation should give states the authority to impose any new tax-collecting requirements on small Internet businesses and entrepreneurs, which they argue would be burdensome.  A similar resolution was introduced by Rep. Dan Lungren (R-Calif.) in the House in February.

“That authority should not be given to the states because it would result in piecemeal state [sales] taxes,” Ayotte said, adding that final decisions on the resolution, as of Tuesday, were still being wrapped up. “Ultimately, I certainly don’t want to put us in a position where we are empowering further taxes.”

Currently a state cannot compel out-of-state Internet vendors to collect and pay the sales tax its residents are required to pay on purchases from traditional brick-and-mortar stores. 

For example, when a customer in Illinois, which has a sales tax, buys a product from an online vendor in New Hampshire, which does not have a sales tax, Illinois cannot force the New Hampshire vendor to collect and pay the Illinois tax on that sale. 

The Joint Committee on Deficit Reduction has three weeks to slash $1.2 trillion from the government’s budget, and while the sales tax proposals would not contribute to federal coffers, supporters argue the added state sales tax revenue could help mitigate the effect of cuts on already strapped state budgets.

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