Virginia Senate Candidates Split on Internet Sales Tax

Democratic senatorial candidate and former Virginia governor Tim Kaine, speaking at a Northern Virginia Technology Council forum, supported an effort to extend the collection of state sales taxes on Internet sales, even to companies that don't maintain a physical presence in the state.

Current law requires online merchants to collect and remit sales taxes to state governments only when they have physical operations in that state. Online retailers and catalog merchants are not required to collect sales taxes on transactions involving out-of-state customers. Kaine is looking to equalize the burdens of online and offline merchants. He pitched it as a "fundamental fairness issue," saying that bricks-and-mortar stores are being hampered in their efforts to compete with online retailers. He held out the possibility of exemptions for small sellers, to spare them the burden of complying with the dizzying array of state and local tax codes.

Republican former Governor George Allen, who is looking to reclaim his old Senate seat, disagreed. Speaking at the same event, Allen made the case that businesses that don't derive benefits from operating within a state should not be compelled to pay sales taxes to that state. "It would be very burdensome, particularly for small businesses, to comply," Allen said. He raised the specter of "Maryland auditors coming in" to examine the sales records of Virginia businesses.
There was daylight between the two on some other issues that are important to companies in Northern Virginia's thriving technology corridor.