Bill to collect Internet purchase sales tax looks set for Senate OK

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WASHINGTON, April 26 (UPI) -- The U.S. Senate has moved closer to passing a bill to tax purchases made over the Internet but the bill will have a tough time in the House, lawmakers say.

"There's a lot of political difficulty getting through the fog of it looking like a tax increase," said Rep. Steve Womack, R-Ark., one of the main sponsors of the bill in the House.

The bill would allow states to compel online retailers, regardless of their physical location, to collect state and local sales taxes for purchases made over the Internet and return those taxes to the states where a shopper lives, BusinessWeek reported.

Currently, states can only require online stores to collect sales taxes if they also have a physical presence in the state. That makes many online sales essentially tax-free, a situation brick-and-mortar retailers like Walmart say gives an unfair advantage to online stores like Amazon and eBay.

"The special treatment of big online businesses at the expense of retailers on Main Street will soon be a thing of the past," Bill Hughes of the Retail Industry Leaders Association said.

The Senate voted 63-30 Thursday to end debate on the bill but delayed a final vote on passage until May 6, when they return from a weeklong vacation.

The U.S. Commerce Department estimates Internet sales in the U.S. totaled $226 billion in 2012, up nearly 16 percent from the previous year.