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Online sales tax bill moving ahead in U.S. House

WASHINGTON (Reuters) - The U.S. Congress is moving ahead on legislation allowing states to collect sales taxes from online shopping, with the chairman of a key committee expected to release basic principles for the bill shortly.

A source who has met with the committee on the legislation told Reuters the principles will be released next week. They will likely be broad concepts rather than detailed guidelines, the source added.

Representative Steve Womack, a Republican from Arkansas who is shepherding the legislation in the House, said on Thursday that Judiciary Committee Chairman Bob Goodlatte would release the principles "very soon," and that the bill is a "front-burner" issue.

The committee is "currently examining all of the issues surrounding the collection of online sales taxes and working on alternatives to the bill passed by the Senate," said a House Judiciary aide.

Under a 1992 U.S. Supreme Court ruling, states can tax Internet sales only if those sales were made by companies with a physical presence within their borders. The Senate passed a bill this spring that would extend the authority of states to require retailers in other places to collect the taxes, although it exempts merchants with annual out-of-state sales of $1 million or less.

The legislation has bipartisan support in the Republican-dominated House. In addition, conservative economist Arthur Laffer has said the tax will create jobs. Internet retailer Amazon.com Inc backs it as well.

States led by both Republican and Democratic governors, meanwhile, see taxing Web purchases as a way to collect revenue they are already owed and to raise funds without relying on federal aid. Small business owners say it would allow them to compete fairly with major retailers.

Nonetheless, opposition is mounting. EBay Inc fought the legislation when it was in the Senate, and anti-tax activist Grover Norquist has said the legislation will result in people paying more taxes. The conservative National Taxpayers Union released a survey that found only 35 percent of 1,000 likely voters support "a new federal Internet tax scheme."

The coalition supporting the tax released a poll earlier this summer that found 53 percent of Americans, though, support giving "states the explicit authority to require online-only retailers to collect state sales tax."

(Reporting by Lisa Lambert; editing by Matthew Lewis)

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