Backers of tax on Web sales renewing push

Now that the government shutdown is over, House Republicans may turn their attention back to passing a bill that would let states charge online shoppers sales tax when they buy from websites such as Amazon and eBay.

The Senate passed the Marketplace Fairness Act back in May, but the Internet sales-tax bill has been buried in the House Judiciary Committee ever since, as Congress focused on the government shutdown and the debt ceiling.

With Republicans and Democrats agreeing this week to a short-term deal that will fund the government and raise the debt ceiling into early next year, proponents of the Marketplace Fairness Act hope House Republicans will take another look at the bill.

Many expect House Judiciary Chairman Robert W. Goodlatte, Virginia Republican, to hold a hearing on the Marketplace Fairness Act this fall, but where it goes from there is anyone’s guess.

“I think we’re in good shape,” said David French, senior vice president of government relations at the National Retail Federation, which supports the bill. “We’re past the shutdown. The Hill’s back to work. We’re seeing some progress on this bill.”

Traditional retailers have been big supporters of the Marketplace Fairness Act, because they say online merchants that don’t have to collect sales tax enjoy an unfair advantage, because their prices seem lower.

A number of states also back the Marketplace Fairness Act, because they are losing tax dollars to online shoppers who fail to pay such taxes. But this bill would allow them to require online merchants to collect the tax at the point of the sale, making it more likely the states will see the money.

“Right now, the best thing we’ve got going is that we have a chairman who has taken the issue seriously and wants to move it forward,” said David Quam, deputy director for policy at the National Governors Association. “We’ll definitely be talking about this issue now that the shutdown is over. We were pushing it hard before, and now we will take that mantle back up.”

The Marketplace Fairness Act has received an unusually large amount of bipartisan support in the Senate and House, but many Republicans remain wary of supporting a bill that could be seen as a new tax, which is causing Mr. Goodlatte to take a long, hard look at the bill before making any recommendations.

“We’re definitely taking a closer look at this bill than the Senate did,” said a House Judiciary aide.

Last month, Mr. Goodlatte released a list of “seven principles” that he hopes the bill will address as his committee considers sending their own version to the House floor, and eventually back to the Senate.

One of the biggest points he made was that any Internet sales tax needs to be simple for the online merchants that will be collecting the money.

Proponents of the Internet sales tax point to software they say will allow online retailers to easily collect and remit taxes to state and local governments across the country, but opponents say the process will be arduous and time-consuming, adding to the compliance costs these online retailers face.

Mr. Goodlatte also wrote that any Internet sales-tax bill should seek to level the playing field for traditional and online retailers. Right now, traditional retailers complain they are at a disadvantage by having to collect sales taxes that their online peers don’t.

However, online stores say this bill could force them to collect sales taxes for about 9,600 different state and local governments around the country, which would be far more unfair, because a brick-and-mortar store need only charge the tax rates of the few taxing jurisdictions — state, county or city — in which it is based.