Internet sales tax bill pushing through Capitol Hill

Krystal Klei, Reporter
POSTED: 06:45 PM MDT Apr 25, 2013    UPDATED: 11:53 AM MDT Apr 26, 2013 
EL PASO, Texas -

     Internet sales tax has been a hot topic in state and federal legislation. Yesterday a bill focusing on the topic made a step towards becoming law.

     The Marketplace Fairness Act was pushed through a vote by the Senate.

     The act aims to equalize sales tax laws across the United States for online vendors.

     The bill would require online companies to charge sales tax to each customer, based on the residence of the buyer.

     Only small online businesses doing less than one million dollars in sales a year would be exempt.

     Currently. law only requires online companies to charge sales tax in states where they have a building or storefront. In addition, state sales tax laws vary across borders.

     The bill has garnered strong opposition and support at the Capitol, and around the region.

     In El Paso, small business owner Chris Rowley said he is in support of the act.

     According to Rowley, small storefronts like his, Up and Running, face competition from online vendors.

      He told ABC-7 customers will sometimes visit the store, get sized for running shoes, write down the brand and size of a favorite fitting, and then leave without a purchase. He said usually they plan to find the shoe online with hopes of getting a better deal by avoiding sales tax.

     As a result, Rowley said online stores have an unfair advantage over specialty markets like running shoes.

     "Proponents say what they're doing is trying to level the playing field, but in fact, we believe they're tilting the playing field," WE R HERE Executive Director Phil Bond said.

     WE R HERE is a national coalition of small online businesses. Bond said the coalition members believe the act could devastate small online companies, by requiring them to file separate tax forms with every state in which they do business.

     As a result, Bond said the small companies will be forced to relocate employees toward accounting, which may disrupt their business plan.

     "If any small business has to take time away from business, it's going to hurt them or even threaten their existence," Bond said.

     Large companies like Amazon are in support of the act. Those who oppose it said big-box companies approve of the bill because they already are being forced into applying online sales tax. Bond said this means the bill will only hurt small online companies.

     "What the legislation does, it says these very small microbusinesses get treated just like Amazon and I think a lot are just going to go out of business," Bond said.

     According to a report by Forbes, in 2010 the U.S. Bureau of the Census estimated that over $4 trillion in transactions were processed on the web.

    Of that, the report estimated more than $870 million of potential tax revenue was lost on the internet.

     The debate over the tax will continue in the Senate, as amendments are discussed, and in the House, where a vote will need to be held.