U.S. Senate Advances Internet Sales Tax Bill

A bill that would allow states to collect taxes on online sales is one step closer to making its way to the U.S. House of Representatives.

The U.S. Senate voted 74-23 on Wednesday to advance the Marketplace Fairness Act, S. 743, which grants states the power to tax online sales.

“It’s a bill that would result in the taxation of Internet sales, driving up costs for consumers,” the Heritage Foundation’s Rob Bluey and Kelsey Harris note.

“The latest vote suggests supporters of the bill are likely to see it win approval in the Senate later this week,” The Hill suggests.

“Internet retailers have an advantage over brick and mortar retailers,” Sen. Dick Durbin (D-Ill.) said on the floor of the senate Wednesday. “This has caused many stores on Main Streets to face competition that is unfair … so we’re trying to level the playing field.”

Naturally, senators from states that impose no sales tax are against the bill.

“This legislation would impose new burdens on small businesses not only in New Hampshire but actually across the country,” said Sen. Jeanne Shaheen (D-N.H.).

“Small businesses across the country — not just in non-sales tax states, such as New Hampshire, but small businesses across the country — will see their tax burdens increase," she added.

Small businesses that earn less than $1 million annually from out-of-state sales are exempt from the bill's reach.

The bill also requires states to "provide retailers with software to calculate sales taxes based on a buyer’s zip code,” The Hill report explains.

“Under current law, states can only collect sales taxes from retailers that have a physical presence in their state. People who order items online from another state are supposed to declare the purchases on their tax forms, but few do or are even aware of the law,” the report adds.

Although it appears likely the bill will pass the U.S. Senate, it’s future in the House remains uncertain.

Here’s a breakdown of how the U.S. Senate Wednesday:

And here’s the complete text of the Marketplace Fairness Act, S. 743:

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