WASHINGTON – The Senate closed debate late Thursday afternoon on landmark legislation to allow states to force out-of-state online businesses to withhold sales taxes on products sold to their residents.
The vote was 63-30 signaling strong support. The law is expected to pass the Senate in early May and head to the House, where it faces a less certain future.
Big store-based retailers such as Minnesota-based Target and Best Buy have lobbied for the online sales tax for years to remove what they call an unfair advantage in the battle for customers. Small bricks-and-mortar retailers also supported the legislation.
Minnesota’s Senators, Al Franken and Amy Klobuchar, co-sponsored the bill, called the Marketplace Fairness Act. Both pointed to cases where customers took advantage of the expertise of local businesses to learn about products, then bought online because the vendors didn’t charge sales tax.
The bill exempts online businesses that have less than $1 million a year out-of-state sales.
Minnesota officials have estimated that unpaid online sales taxes cost the state $400 million a year in lost revenue.