SACRAMENTO, Calif. — Congress is wading into the roiling dispute between states and giant Internet retailer Amazon.com Inc. over collecting sales taxes on online purchases.
On Friday, Sen. Dick Durbin, D-Ill., introduced legislation that would require Internet-only retailers to add sales taxes to customers’ bills, just as their competitors with bricks-and-mortar stores do. Rep. John Conyers Jr., D-Mich., plans to introduce a similar measure in the House.
The congressional effort is aimed at closing a legal loophole created by a 1992 U.S. Supreme Court decision that freed online and catalog sellers from the obligation of collecting sales taxes if their businesses had no physical presence in the state where a buyer lives.
The nation’s largest big-box retailers, as well as small businesses such as independent booksellers and specialty shops, have become increasingly vocal about what they see as an unfair advantage for online retailers. Free of the obligation to collect sales taxes, Amazon, Overstock.com and other Internet-only competitors can offer consumers the same merchandise substantially cheaper. The California base rate currently is 7.25 percent, but that can swell to nearly 10 percent with the addition of local sales taxes.