WASHINGTON – Advocates of an effort to help states collect taxes on Internet sales won a symbolic but important victory Friday as the Senate signalled solid bipartisan support for the proposal.
Senators voted 75-24 for a nonbinding measure that endorses giving states more power to collect existing sales taxes on purchases their residents make from out-of-state Internet companies.
Though the vote was merely a show of sentiment, the one-sided outcome showed that supporters of collecting the levies could prevail should the Senate consider binding legislation later this year.
A congressional battle over the issue has been simmering for years, pitting Internet companies against traditional retail stores.
Part of what is at stake is potential revenue for cash-starved state governments across the country. An estimated $20 billion in sales taxes go uncollected annually by out-of-state online merchants.
Supporters also argue that not collecting the levies is a competitive disadvantage for retail stores, which must collect local sales taxes.
One sponsor, Sen. Richard Durbin, D-Ill., said Internet sales taxes should be collected “so those local businesses will have a fighting chance.”
Sens. Mike Enzi, R-Wyo., and Lamar Alexander, R-Tenn., were other chief sponsors.
Opponents said the plan would be unworkably complicated, would pressure states without sales taxes to adopt them and would encourage companies to move overseas, where they said sales taxes could not be enforced.
“It tramples on states’ rights,” said Sen. Kelly Ayotte, R-N.H.
Online businesses with less than $1 million in annual sales would be exempted from having to collect the levies.
In states with sales taxes, online buyers are currently supposed to pay a tax on their purchases but the requirement is seldom enforced.
Twenty-six Republicans voted to endorse collecting Internet sales taxes and 19 Republicans voted against it. Democrats backed the proposal, 49-5.
Friday’s vote was on an amendment to the 2014 budget the Senate was debating.