The US Senate passed legislation Monday that would end years of tax-free online buying by allowing states to collect sales tax for Internet purchases from web giants like Amazon and eBay.
The Marketplace Fairness Act sailed through the Senate 69-27, but before becoming law it needs to pass the House of Representatives, where several Republican lawmakers see it as potentially one more tax on the American people.
The bill, backed by the White House, would slash an advantage that helped online titans steal business from brick and mortar stores, leveling the playing field for shop owners who long complained that customers enter stores and try merchandise, only to turn around and buy the products more cheaply online.
“Those pleas for the last 20 years have gone unheard,” said Senator Heidi Heitkamp.
“Today is the day that we say yes to America’s small businessman.”
The bill represents a long-fought battle by local governments and businesses to collect taxes on Internet sales to local residents by outside retailers.
The legislation would demand “those selling on the Internet be treated just the same as those selling on the corners of our streets,” said Democratic Senator Dick Durbin.
Businesses with less than $1 million in out-of-state revenue are exempt, according to the bill, which sought to alleviate the burden that collecting and filing taxes from multiple jurisdictions would have on small businesses.
But it raises operating challenges for medium-sized Internet businesses to begin collecting tax payments for state and local jurisdictions, wherever the orders originate.
The National Retail Federation, which represents physical retailers, estimates that $24 billion worth of taxes goes uncollected due to online sales.
Amazon for years has opposed such local taxes. It has had warehouses in less-populated states, but as the company prepares a major physical expansion in order to better carry out a same-day delivery service in major cities, it now supports the bill, if mainly to ensure competitors don’t have an advantage.
Online retailing rival eBay stands in opposition and mounted a stiff lobbying fight to block or alter the bill.
The public appears unreceptive to the tax. A national poll by Quinnipiac University shows 56 percent of voters said they think items purchased on the web should not be subject to state sales taxes, while 37 percent said they should be.