Retailers applaud online tax bill

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WASHINGTON, March 23 (UPI) -- Major U.S. retail groups applauded the Senate's approval in a 75-24 vote for a law forcing large Internet firms to collect state sales taxes.

The law, which exempts businesses with annual out-of-state sales of less than $1 million, "is proof-positive that the federal government's special treatment of online-only retailers will soon be a thing of the past," said Retail Industry Leaders Association President Sandy Kennedy.

The amendment is a "clear victory for Main Street retailers and those who believe in free and fair competition," Kennedy said.

"The retail community is unified in our commitment to pass the Marketplace Fairness Act and make it law," said the President and Chief Executive Officer of the National Retail Federation Matthew Shay.

Shay called the vote a "critically important issue for retailers both large and small across the country."

Local retailers have long considered it unfair that they must charge state sales tax on purchases, while large Internet firms, like Amazon.com, can sell the same item without charging a sales tax, essentially giving their prices a discount.

The U.S. Supreme Court has ruled that states can only force companies to charge a state sales tax if the company has a physical presence in that state.

Some states have attempted to force Internet companies to pay sales tax by redefining the terms so that smaller Internet companies that re-direct customers to larger firms are also considered part of the lager company. That expands the definition of having a physical presence in a state to include smaller companies affiliated with the larger retailer.

But retail groups have been seeking a federal law that would level the playing field.

Complaints about the Senate's Marketplace Fairness bill came from states that do not have a state sales tax.

"It basically forces all states to have sales tax whether they want them or not," said Sen. Max Baucus, D-Mont., chairman of the Senate Finance Committee.

"In Montana, we don't have sales tax but we'll have to collect sales tax for other states under this law," he said.