Senate bill powers up state online sales taxes

State governments would be able to collect online sales taxes under a bill due to be introduced in the Senate on Nov 9. Supporters of the online sales tax collection requirement include Wal-Mart Stores, Target and other "big box" retailers who argue they are at a disadvantage against online-only competitors. A bipartisan group of up to seven senators will introduce the bill, which is broader than similar legislation introduced in the Senate in July.

The new bill will differ from a bill in the House of Representatives by affecting more small businesses under a lower exemption threshold, the sources said. State and local governments support the upcoming bill even more than earlier measures. Retailers have been exempted from collecting taxes on sales in states where they do not have a physical presence since a 1992 Supreme Court case -- before the advent of e-commerce. Backers of the new bill say state and local governments will lose $24 billion in uncollected sales taxes in 2012 without the power to tax Web transactions. States have worked for more than a decade to streamline rules and get congressional approval to collect the taxes.