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Senate Passes Bill To Help States Collect Sales Tax From Internet Purchases

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The Senate passed a bill late Monday that would make it harder for online shoppers to avoid paying sales taxes, but the legislation could run into opposition in the Republican-controlled House. NY1's Michael Scotto filed the following report.

It's not often that bills pass with bipartisan support in Washington.

But on Monday, the Senate passed what is known as The Marketplace Fairness Act. It's legislation that would make it easier for states to collect sales taxes from online purchases.

"This bill says that the states can now require the internet retailers to collect the sales tax at the point of purchase and to remit those proceeds back to the states," Sen. Richard Durbin (D-Ill.)

Currently, states lack the power to collect sales taxes on purchases from out-of-state retailers unless the company has a physical presence in the state.

As a result, state governments lose a reported $23 billion a year in tax revenue and brick and mortar businesses that are required to collect sales tax are put at a disadvantage.

But opponents argue that the bill gives states too much power to reach across their borders.

"It is fundamentally unfair to ask a Texas business to collect taxes for California Governor Jerry Brown or for New York Mayor Bloomberg and a nanny state," Sen. Ted Cruz (R-Texas) said.

They say it will actually impose a huge burden on the small businesses supporters claim they want to help.

"Online retailers will have to collect sales taxes in something like 10,000 jurisdictions around the country," Curtis Dubay of the Heritage Foundation said. That is not an equal burden.

But supporters say only businesses with more than $1 million a year in sales will be forced to comply.

"This bill will affect the big boys," Durbin said. "The internet retailers like Amazon, like E-Bay."

Despite a big win in the Senate, the bill still faces an uncertain future in the House, where some Republicans are already viewing it with skepticism.

Top GOP leaders in the House have yet to take a position on it.

The head of the committee that will hold hearings on the bill has said there are problems with it, but has also indicated that he is open to addressing them. ClientIP:, UserAgent: CCBot/2.0 ( Profile: TWCSAMLSP