US senators introduce online sales tax bill

(WMC-TV) - On the brink of the holiday shopping season, two US Senators from Tennessee are leading a new effort to start charging online sales tax.

The Marketplace Fairness Act is an attempt to level the playing field for brick and mortar businesses and their online competition.  It would eliminate the loophole for those who turn to the web to avoid paying sales tax on their purchases.

"This has been a problem for the last 20 years, but the senators with their legislation have solved the problem," said Tennessee Senator Lamar Alexander.

Twenty years ago, the Supreme Court said the issue was too complicated.  At the time, they said asking catalog businesses to get a handle on all the state's sales tax details was not worth pursuing.  Now, lawmakers say it is time, because the loophole means big money.

"This is an issue of the state's right to collect or not to collect on sales tax," said Alexander.  "It's about closing a tax loophole, it's about stopping the subsidization of some businesses over others and some taxpayers over others."

Both of Tennessee's senators are in support of the bill as co-sponsors.  Alexander went as far as to tell state leaders and merchants to get ready for changes to come.

"If I were governor, if I were an online retailer or a catalog retailer, I would make my plans to conduct my business in this way," he said.

So far, the bill has support of online giant Amazon, but is opposed by eBay.

Last month, Governor Bill Haslam announced Amazon will begin collecting Tennessee state sales tax in 2014.

The senate bill exempts small businesses with less than $5,000 in online sales.

Copyright 2011 WMC-TV. All rights reserved.