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White House Supports Online Sales Tax Bill

BY Sarah Lai Stirland | Monday, April 22 2013

The Obama administration on Monday said that it "strongly supports" legislation under consideration in the Senate that would allow states to force out-of-state retailers to collect taxes on their online sales.

"The Administration strongly supports S. 743, which will level the playing field for local small business retailers that are in competition every day with large out-of-state online companies," the White House said in a Statement of Administration Policy on Monday.

The Senate is scheduled to vote on the legislation sometime this week. The bill, sponsored by Wyoming Republican Mike Enzi, enjoys bipartisan support in the senate. In addition, Amazon supports the legislation, as well as former GOP Governors Haley Barbour of Mississippi and Bob McDonnell of Virginia, according to the Wall Street Journal.

White House policy staff noted that tax collection technologies have improved in recent years, and that states have "made significant strides to cut red tape and simplify their tax systems."

The statement also stressed that online sales are growing as a percentage of total sales in the U.S., and that the loophole allowing big online businesses and catalog retailers to dodge the collection of state taxes is undermining states and cities' abilities to adequately provide crucial public services, such as education, public infrastructure healthcare and to ensure public safety.

The statement comes after eBay President and CEO John Donahoe sent an e-mail to millions of eBay users over the week-end asking them to contact their members of Congress to oppose the legislation.

In his e-mail to users, Donahoe portrayed the fight over how the taxes are collected as a battle between big national retailers and Amazon -- a fight that comes at the expense of consumers and small businesses (many of whom operate on eBay.)

Among other things, he wrote:

"For consumers, it means more money out of your pocket when you shop online from your favorite seller or small business shop owner. For small business sellers, it means you would be required to collect sales taxes nationwide from the more than 9,600 tax jurisdictions across the U.S. You also would face the prospect of being audited by out-of-state tax collectors. That's just wrong, and an unnecessary burden on you."

Donahoe said that businesses with less than 50 employees or $10 million in annual sales should be exempt from the legislation.

But the Administration on Monday implied that the legislation wouldn't be as burdensome as its opponents portray because it requires states to provide retailers with free software to calculate the sales taxes on the transactions.

The Silicon Valley CEO association TechNet opposes the senate bill because it feels that it is "riddled with holes, and most importantly, does not provide enough protections for small businesses, the backbone of our economy," said TechNet's President and CEO Rey Ramsey in a statement issued Friday.

A group of associations representing catalog mail companies, direct marketers and online retailers has formed a new group called TRUST (True Simplification of Taxation,) to come up with alternate proposals to the current bill that the Senate is about to vote on.