The Senate approved legislation last week to expand the ability of states to collect state and local sales taxes on purchases made over the Internet.
Online merchants now are only required to collect sales taxes in states where they have a physical presence, like administrative offices or distribution warehouses. The bill that passed 69-27 allows states to require taxes be remitted on all online sales.
The National Conference of State Legislatures estimates states lost $23 billion last year because they couldn’t fully collect taxes.
Bill supporters said the legislation would help stores now at a disadvantage because consumers shop online to avoid paying sales tax.
“This bill is about leveling the playing field between brick-and-mortar and online retailers and collecting a tax that is already due,” said Sen. Michael Enzi, R-Wyo.
National retailers, including Wal-Mart favored the bill. Amazon.com also supported it while online services like eBay and Overstock.com opposed it.
Opponents argued that the proposal essentially creates a new tax and that online retailers would be burdened by complicated requirements to collect taxes for state and local entities that differ on rates as well as what is subject to taxation.
“This bill would hurt economic growth and would be a mistake,” said Sen. Ted Cruz, R-Texas. “If enacted, it would in effect create a national Internet sales tax.”
Sens. John Boozman, R-Ark., and Mark Pryor, D-Ark., voted for the bill.
The House has not acted on the legislation.