Republican discusses a new approach to taxing online sales

January 14, 2015 03:23 PM

(Bloomberg) -- States could collect sales taxes on out-of-state purchases made over the Internet, in a draft proposal being circulated by a top U.S. House Republican.

The proposal from Representative Bob Goodlatte of Virginia differs from a plan that passed the Senate in 2013 with the support of major retailers including Inc. and Wal-Mart Stores Inc. is No. 1 in the Internet Retailer Top 500; is No. 4.

Goodlatte, chairman of the House Judiciary Committee, would base sales taxes on the location of the seller, not the buyer. The proposal is an attempt to resolve a decades-long dispute among states, online retailers and brick-and-mortar stores.

Currently, online sellers and catalog companies typically don’t collect sales taxes on purchases made in states where they have no physical presence.

In 2013, the Senate passed a bill that would let states impose taxes on out-of-state sellers, a measure that was applauded by retailers and governors of both parties. The proposal died in the House without a vote. Opponents included EBay Inc.

Goodlatte’s bill, using what’s known as origin sourcing, is an attempt to narrow the number of tax rates and audits any seller would face by limiting the states any retailer interacts with.

Under the draft bill, a multi-state commission would handle distribution of taxes among the states based on the location of purchasers.

A Judiciary Committee aide, speaking on condition of anonymity to describe lawmakers’ strategy, said the document is designed to be a starting point for discussion on the issue.

A copy of the draft was obtained today by Bloomberg News. The Hill newspaper first reported on the draft.




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