E-tailers vs. retailers on tax issue

A clash of the retail titans is lining up over the issue of taxing Internet sales, and Congress is being called on to referee.

Amazon.com and other online retailers are seeking to rally anti-tax Americans with a proposed voter referendum in California to overturn a new state law forcing Internet merchants to collect sales taxes on goods sold online to residents there. On the other side is a starting lineup of brick-and-mortar retailers with entrenched lobbying muscle in D.C.: Wal-Mart, Sears and the National Retail Federation, among others. They’re backed by states, which see taxing online sales as helping ease their budget woes. “Congress has to take action,” said Neal Osten, who handles state and federal issues for the National Conference of State Legislatures. In an era of cuts, “this is $23 billion that the federal government can give to the states.” Whether this is the year for a federal Internet sales tax bill remains to be seen — taxing the Internet has been a political hot potato since the dawn of the Internet age.

In Congress, Sen. Dick Durbin (D-IL) is expected to introduce a bipartisan bill in the coming month called the Mainstreet Fairness Act. It would allow states to require online retailers to collect sales tax — if states first agree to standardize those taxes. But Sen Durbin has put off introducing the bill while he tries to line up support as retailers on both sides of the debate have stepped up lobbying activity on the Hill.