Tax-free shopping on the Internet could be in jeopardy under a bill making  its way through the Senate.

The bill would empower states to require online retailers to collect state  and local sales taxes for purchases made over the Internet. The sales taxes  would be sent to the states where a shopper lives.

Under current law, states can only require stores to collect sales taxes if  the store has a physical presence in the state. As a result, many online sales  are essentially tax-free, giving Internet retailers a big advantage over  brick-and-mortar stores.

The Senate voted 74 to 20 Monday to take up the bill. If that level of  support continues, the Senate could pass the bill as early as this week.

Supporters say the bill is about fairness for businesses and lost revenue for  states. Opponents say it would impose complicated regulations on retailers and  doesn’t have enough protections for small businesses. Businesses with less than  $1 million a year in online sales would be exempt.

“While local, community-based stores and shops compete for customers on many  levels, including service and selection, they cannot compete on sales tax,” said  Matthew Shay, president and CEO of the National Retail Federation. “Congress  needs to address this disparity.”

And, he added, “Despite what the opponents say this is not a new tax.”

In many states, shoppers are required to pay unpaid sales tax when they file  their state income tax returns. However, states complain that few people  comply.

“I do know about three people that comply with that,” said Sen. Mike Enzi,  R-Wyo., the bill’s main sponsor.

President Barack Obama supports the bill. His administration says it would  help restore needed funding for education, police and firefighters, roads and  bridges and health care.

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http://techland.time.com/2013/04/23/tax-free-internet-shopping-jeopardized-by-bill/#ixzz2RLDPJE86