Business

Internet sales tax bill advances in Senate

Posted May 3, 2013
Updated May 4, 2013

Congress is again considering a change to federal tax policy that would boost state budgets and help local businesses. But the change – allowing states to require sales tax on online purchases – has proven unpopular with shoppers.

To date, online purchases have not been widely subject to sales tax because the varying rates from state to state make it hard to calculate, especially for those who buy from an out-of-state site. According to estimates, a change could cost consumers $23 billion more per year.

For a retailers like Sandy Friedman, the internet and the ability for online buyers to avoid the 6.75 percent sales tax he must charge on arts, crafts and lighting at his Cameron Village shop is simply a matter of fairness.

Friedman says the tax policy discrepancy puts him at a disadvantage.

"The playing field should be level, and we shouldn't have this disparity online with brick-and-mortar stores," he said.

He is carefully watching lawmakers in Washington, DC. Sandy Friedman Brick-and-mortar retailers in favor of internet tax

"I think it's a great idea," he said of the proposal. "It is an unfair advantage. It takes money out of the local community. We all have to pay taxes eventually one way or the other."

The bill has passed a first vote by the Senate. A final Senate vote is scheduled for Monday.

The bill would allow states to require all Internet sellers to collect state and local taxes for online purchases. State governments would be required to provide free software to Internet retailers to calculate those sales taxes.

Online retailers with out-of-state sales of less than $1 million a year would be exempt.

President Barack Obama has thrown his support behind the bill, which the White House said "will level the playing field for local small business retailers that are in competition every day with large out-of-state online companies."

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