Efforts to Add Online Sales Tax to Defense Bill Thwarted

Online tax bill defense billAn effort by three U.S. senators to add an Internet sales tax amendment to the 2013 National Defense Authorization Act has failed, reports Computerworld. Last week, Senators Dick Durbin, an Illinois Democrat, Mike Enzi, a Wyoming Republican, and Lamar Alexander, a Tennessee Republican, proposed a version of the Marketplace Fairness Act as an amendment to the National Defense Authorization Act, a large military spending bill. On Monday, the Senate voted to close debate on the defense bill and proceed toward a final vote without considering the sales tax amendment. The senators reportedly are unlikely to offer the amendment during final debate on the defense bill. Still, the senators may try to find another bill to which they can add the sales tax amendment.

The Marketplace Fairness Act would allow the 46 U.S. states with sales taxes to require online sellers with no physical presence within their borders to collect the tax from their customers. Studies show that collecting online sales tax would generate about $23 billion in revenue. Currently, online shoppers are obligated to pay sales tax directly to the government, but few heed this requirement.

In 1992, the Supreme Court ruled that states could not force companies located outside their boundaries to collect their taxes on long-distance sales. Today, eCcommerce sites collect taxes only from customers who buy within the state where they are located. That could mean being headquartered in a state or having an office, distribution center, sales representatives or retail outlets there. Proponents of online sales tax say this ruling occurred before the Internet was used widely as an eCommerce tool and should be reconsidered.