Indiana News

Stymied at Statehouse, Retailers Take Online Sales Tax Fight to D.C.

Senate has passed bill; Young a co-sponsor in House

5/7/2013


U.S. Rep. Todd Young (R-9th)

Retailers lost a statehouse battle over online sales taxes, but they're halfway to a bigger victory in Congress.

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The Senate voted 69-27 to undo a Supreme Court ruling which prevents states from enforcing sales tax collections from online purchases. Indiana's Dan Coats (R) and Joe Donnelly (D) both voted yes.

Similar legislation has languished in Congress for years. Representative Todd Young (R-9th), a co-sponsor in the House, says it's taken a while to correct misunderstandings about the bill. While opponents characterize the bill as a tax hike, Young says buyers are supposed to be paying sales taxes already -- the bill would enable states to force merchants to collect it.

Representative Todd Rokita (R-4th) says he's keeping an open mind, but is leaning strongly toward supporting the bill. He says it doesn't make sense to expect people to pay the tax on the honor system.

Young says the tax loophole gives websites an unfair advantage over bricks-and-mortar retailers.

Amazon has agreed to collect sales tax on Indiana purchases starting next year, but other online retailers aren't affected. The 1992 Court ruling, which at the time centered on mail-order businesses, ruled states could only enforce the sales tax on businesses with a physical presence in the state.

Legislators had threatened to adjust Indiana law to classify Amazon's seven Indiana warehouses as a physical presence requiring the tax. Even after the agreement, the Indiana House voted to make Amazon collect the tax six months sooner. The bill died without a hearing in the Senate.

But legislators who fought Amazon in Indianapolis now find themselves on the same side in Washington. The online bookseller says a federal law would eliminate the need to strike piecemeal agreements with different states.

The federal proposal, authored by Senators Dick Durbin (D-Illinois) and Mike Enzi (R-Wyoming), would cover all online retailers with more than a million dollars a year in sales.

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