Senate Majority Leader Harry Reid (D-NV) believes that Congress could pass an Internet sales tax this year, allowing states to collect sales taxes from online businesses that have no physical presence there.
Reid said the legislation was “very fair” and would “help these little strip malls we have all over America,” according to The Hill.
In 1992, the Supreme Court held that tax codes were so complex they represented an unreasonable burden on interstate commerce. The ruling allowed online companies like Amazon to avoid collecting sale taxes in states were they don’t have a physical presence.
But under the Marketplace Fairness Act, states could require online businesses to collect sales taxes. The legislation exempts sellers who make less than $500,000 in total remote sales a year. States would also have simplify their tax systems before collecting sales taxes from online businesses. The bill could raise up to $23 billion in new revenue each year.
Sens. Mike Enzi (R-WY), Dick Durbin (D-IL) and Lamar Alexander (R-TN), who introduced the bill, have also said they expect it to pass either this year or in 2013.
There is bound to be some opposition to the legislation, however. Last year, Sen. Ron Wyden (D-OR) and Kelly Ayotte (R-NH) introduced a resolution stating Congress will not enact legislation that gives the states the authority to impose unfair taxation on online businesses.
“A state can force an in-state store to collect and remit sales tax because that store benefits from state services,” Wyden explained. “But Virginia isn’t going to send the fire department to help out an online retailer operating out of a living room in Oregon.”