In a story published by the Washington Internet Daily, author Kamala Lan takes a look at both sides of the ongoing debate over the Internet sales tax issue. He notes that many of the issue’s strongest opponents believe that it’s unlikely the bills will pass in a weak economic environment where the bill would likely dissuade small business owners from conducting their business online. Other Internet sales tax opponents cited the lack of bipartisanship in the current Congress as a barrier to the bill’s passage. U.S. Congressman Dan Lungren is one of the champions for the small Internet-enabled businesses who would be hurt by new sales taxes. “We ought not to have a tax on the use of the Internet and we ought not to forget the plight of small businesses considering the economy and the state it’s in,” Lungren said. Read the entire article below.

'Pretty Uncertain Future'

Durbin, Conyers Seek Bipartisan Support For Online Sales Tax Bills; Opponents Doubt Passage

By Kamala Lan of the Washington Internet Daily

Bills by Sen. Dick Durbin, D-Ill., and Rep. John Conyers, D-Mich., are aimed at establishing a tax collection scheme for online retailers and equalizing tax obligations between those retailers and brick-and-mortar stores, but the state of the economy and expected opposition from Republicans could work against them, opponents of the bills said. Some state tax revenue departments are still hopeful that a measure will get passed, considering the problems California, Rhode Island and other states had enforcing the obligations with Amazon. Attention has shifted to Congress now that Amazon has agreed to collect sales taxes on California purchases when a California law takes effect next year (WID Sept 26 p8). Durbin\'s S-1452 was referred to the Senate Finance Committee. Conyers\' companion bill, HR- 2701, was referred to the House Administrative Law Subcommittee. The committees didn’t comment.

Conyers hopes his bill will be considered by the House Judiciary Committee soon, his spokesperson said in an email. “In previous Congresses, the Main Street Fairness Act enjoyed broad bipartisan support and Mr. Conyers intends to reach out to past supporters.” If enacted, Durbin’s legislation would benefit states that are facing serious fiscal challenges, said Peter McVay, associate director of revenue services at the Rhode Island Division of Taxation. “We’re optimistic that the measure will pass this year,” said David Sullivan, Rhode Island tax administrator. “However, the fate of any federal legislation is difficult to predict.”

Durbin is working to obtain bipartisan support, his spokeswoman said: He hopes to see bipartisan support "in the future that will give the bill a better chance of passage." He is open to it moving as is or as part of a larger piece of legislation, she said. But some opponents said it’s the lack of bipartisan support that is likely to hold up passage. Congress, “particularly on the Republican side, has no appetite for tax legislation this year,” said Mark Griffin, Overstock chief legal counsel. “The Internet is one of the most innovative and exciting areas of commerce and this bill proposes a big barrier to entry for new innovators in the retail space.” The bill "has a pretty uncertain future, in large part, because it has no Republican support," said Andrew Moylan, government affairs vice president for the National Taxpayers Union. The bills seek “to protect older existing business models at the expense of consumers and growth,” said the Computer & Communications Industry Association. Larger issues could trump tax collection, CCIA and NTU said. “I doubt Congress has the bandwidth" to take it up this year, said a CCIA spokeswoman. With other high-stakes issues at the federal level, "a lot of these other issues have been pushed to the back burner," Moylan said. "I’d say it probably doesn’t stand a great chance."

Overstock is open to discussing a national standard, Griffin said. But despite the bill's name, there’s nothing fair about it, he said. “Imposing tax collecting obligations on those with a physical presence in the state ... makes perfect sense." But imposing the bill\'s heavy obligations on those without a physical presence doesn't, he said. For e-commerce, "you have to have a massive software program that takes into account all the individual tax holidays ... and the treatment each state legislature gives to different kinds and categories of goods," he added.

In February, Rep. Dan Lungren, R-Calif., introduced a resolution that would protect online retailers and small businesses from sales tax collecting schemes (WID Feb 17 p8). It was intended to remind Congress that “we ought not to have a tax on the use of the Internet and we ought not to forget the plight of small businesses considering the economy and the state it’s in,” Lungren said in an interview. The resolution was co-sponsored by Rep. Zoe Lofgren, D-Calif. The resolution shows there is bipartisan opposition “to the idea of increasing burdens on small and innovative businesses — especially in this economy,” CCIA said. There is consensus that "if Congress is going to take some kind of action on this, we ought to take steps to exempt smaller businesses," Moylan said. It’s obligatory for Congress to find a solution, but there are problems with the bills, Lungren said. “There are unanswered questions that remain with the act and I don’t think they’ve been worked out at this point,” he said. “You can’t have something which unduly impacts interstate commerce.” A solution must be user friendly, he added. "Just because you come up with a constitutionally-approved answer doesn’t mean it’s going to be the right answer for small business."

Reproduced by permission of Warren Communications News, Inc., 800-771-9202, www.warren-news.com.