NASHVILLE, Tenn. -
The days of not paying sales tax for online purchases could soon be coming to an end.
The idea took Tennessee Governor Bill Haslam to Washington Tuesday where two bills before the U.S. House and Senate are being considered that would make online retailers pay what they now don't.
The Marketplace Equity Act (HR 3179) and the Marketplace Fairness Act (S 1832) are designed to help states collect taxes for online purchases. Such purchases are considered remote sales, or sales made in a state where a seller does not have a significant physical presence.
Under the acts, states would treat all purchases equally, regardless of whether they are transacted in person or online. If passed, online sellers would have to collect sales tax owed under state laws.
Not taxing Internet sales helped online retailers like Amazon become economic behemoths, but left in the wake were traditional "brick and mortar" retailers who cried foul because they still had to collect state and local sales tax.
They argued their bottom line was hurt and their assertions backed up by last year's bankruptcy of Borders bookseller which closed hundreds of stores in the process.
One outspoken local retailer about the issue is Cumberland Transit owner Allen Doty.
He told Nashville's News 2 he's seen shoppers take pictures of store items, then find them on line to avoid paying sales tax.
"Folks come in and they will look at a particular jacket from company "X" and take pictures of the hang tag and then go shop for it on the Internet," said Doty.
A statement to Nashville's News 2 from Rep. John Duncan of Knoxville stated, "Congressman Duncan believes out-of-state retailers should not have an unfair advantage over folks here in Tennessee who are building businesses and investing in our communities."
Duncan is a co-sponsor of the House bill, along with Tennessee Rep. Steve Cohen of Memphis.
Senators Lamar Alexander and Bob Corker have co-sponsored the Senate bill. Calls from Nashville's News 2 to each co-sponsor's office were not immediately returned.
In addition to the collection of state sales taxes, both the House and Senate versions have basic provisions. Each state much establish a uniform sales and use tax base and provide a single tax revenue authority for online sellers.
Exceptions are also allowed for small-sellers that are at or below specified sales amounts.
Governor Haslam Tuesday was one of several individuals testifying before House Judiciary Committee on the Marketplace Equity Act.
He carried the message of retailers across Tennessee who say a "level playing field is needed."
"You have local businesses contributing property taxes, sales tax and jobs that are playing on an unlevel playing field, we have to make it work," the governor told the committee.
Governor Haslam has said it would be worth about $400 million in increased revenue for the state, which finds itself in a unique position after making a deal with Amazon last year.
Two distribution centers are currently under construction in Murfreesboro and Lebanon will bring an estimated 2,000 jobs to Tennessee.
To lure the multinational company to Volunteer State, Amazon has been allowed to avoid collecting state sales tax until 2014.
Last year, Amazon.com sales totaled nearly $50 billion. While Governor Haslam is honoring the deal made with the company, he believes untaxed Internet sales are eroding Tennessee's tax base.
A statement from the Governor's office to Nashville's News 2 read, in part, "[The approximately $400 million uncollected] could fund critical state programs for vulnerable citizens, help cover federal mandates that states face, or go back to the taxpayers in the form of additional tax relief."
