Senate Passes Internet Sales Tax Bill

From USA Today: 

The Senate passed a bill Monday night aimed at making it easier for states to collect sales taxes for online purchases, but its final prospects remain uncertain. 

Even so small online retailers are already thinking about the bill's potentially large impact on their operations.

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The issue pits retail behemoths such as Walmart and Amazon against small online sellers such as those on eBay in a fight for price and industry dominance. Those in support of the bill, which include Walmart, Amazon and Target, argue they're at a 5% to 10% price disadvantage by having to charge sales tax. States argue they're missing out on much-needed revenue. Last year, states could have collected more than $11 billion in online sales tax revenue, according to a study by the University of Tennessee. 

"The attempt to do this was almost inevitable given the billions of dollars of transactions that are now being conducted electronically," says Dan Effron, a partner in the tax services group of Marcum LLP, an accounting and consulting firm. But, he says, "I in no doubt agree that the burden of complying with this law on small to medium-size businesses would be a real hindrance." 

Online retailers say the administrative burden of collecting sales tax would curb business growth and make it harder to compete. Perhaps the most contentious provision is a $1 million small-seller exemption — anyone with less than $1 million a year in out-of-state sales wouldn't have to collect sales tax. Small sellers and their advocates say that number is too small.