Senators bring back online sales tax bill

A bipartisan group of senators is taking another crack at online sales tax legislation.

{mosads}Senate Minority Whip Dick Durbin (D-Ill.) and Sens. Lamar Alexander (R-Tenn.), Mike Enzi (R-Wyo.) and Heidi Heitkamp (D-N.D.) rolled out the Marketplace Fairness Act on Tuesday, which would give states more power to collect sales taxes from businesses that don’t have a physical location within their borders.

“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,” Enzi said in a statement.

“It’s time to give states the right to enforce their own laws without having to get permission from Washington.”

The Senate passed a substantially similar version of the Marketplace Fairness Act in May 2013, by a wide bipartisan margin. But top Republicans in the House opposed the measure, and Speaker John Boehner (R-Ohio) made sure it never came up for a vote – much to the chagrin of the retail groups that support the proposal.

Supporters both on and off Capitol Hill say the measure would correct an unfair advantage that online retailers have over brick-and-mortar shops. States are currently barred from collecting sales taxes from out-of-state retailers due to a 1992 Supreme Court decision, though Justice Anthony Kennedy suggested last week that the court should revisit that opinion.

But opponents, including prominent conservative groups and lawmakers, have struck a populist tone, casting the bill as essentially a giveaway to K Street, big box stores and Amazon.

“It’s a changed Congress and a new year, but this Marketplace Fairness Act is the same old, tired idea that stalled in the last Congress,” said Steve Delbianco of NetChoice, one of those opponents.

Backers of the measure face a more difficult path to even getting the bill passed in the Senate, now that Republicans have taken control of the chamber. Senate Majority Leader Mitch McConnell (R-Ky.) is no fan of the legislation, while his predecessor, Minority Leader Harry Reid (D-Nev.), was one of the measure’s biggest champions.

But supporters could try once more to pair the online sales tax measure with an extension of the Internet Tax Freedom Act, a relatively noncontroversial measure barring taxes on online access that is set to expire at the end of September. Senate sponsors of the Marketplace Fairness Act tried a similar tactic last year, but were still unable to get the measure to President Obama’s desk. 

House Judiciary Chairman Bob Goodlatte (R-Va.) has been working on his own proposal, which would levy taxes based on where the retailer – not the customer – is based. But retail groups have already panned that proposal.