states

The National Retail Federation is launching a two-month media blitz to drum up support for legislation that would require online retailers to collect sales taxes from out-of-state customers.

The group wants to close a loophole created by a 1992 Supreme Court decision that found that retailers do not have to collect sales taxes from customers in states where those companies have no store or other physical presence. The ruling applied to catalog retailers, and has since been exploited by online stores. Brick-and-mortar retailers and states say the loophole gives online firms an unfair advantage and is costing states billions in lost sales tax revenues.

NRF and other groups have rallied around a Senate bill that would allow states that meet certain tax-simplification standards to require online retailers to collect sales taxes from out-of-state customers.

"Our current sales tax system unfairly favors one set of retailers over another," NRF President and CEO Matthew Shay said in a statement Tuesday. "Congress is naming winners and losers by its failure to address this issue, and the brick-and-mortar retailers who create jobs across our country want action on this issue now."

The NRF's campaign will include print and online ads, an online petition, videos featuring small retailers who say they are harmed by the loophole, and events around the country to highlight the issue.

While the Senate bill, authored by Sens. Mike Enzi, R-Wyo., and Dick Durbin, D-Ill., has generated lots of attention, it's unlikely to pass in an election year.

Sen. Ben Cardin, D-Md., a Senate Finance Committee member who has co-sponsored the Enzi-Durbin bill, told Tech Daily Dose on Tuesday that pressure is building on Congress to address the issue at some point, saying states are facing "more and more hemorrhaging of revenues" from the loophole. Still, he added the legislation is unlikely to move on its own and will have to be included as part of a broader tax package.

Sen. Lamar Alexander, R-Tenn., sent a room full of small retail shop owners Wednesday on a mission: Persuade 15 GOP senators to vote for his Internet sales tax legislation.

That's the number he and other bill supporters say is needed to get Senate Majority Leader Harry Reid, D-Nev,. to bring the legislation to the Senate floor.

"If we do that, he will bring it to the floor and it will pass the Senate. So it's not complicated," Alexander told members of the Alliance for Main Street Fairness at an early morning Capitol Hill event. They are in Washington to help rally support in Congress for legislation to address a two-decade old Supreme Court decision saying states can't force retailers to collect sales taxes from customers who live in states where those companies don't have a physical presence.

Alexander is one of the main co-sponsors of the bill with Sen. Mike Enzi, R-Wyo., and Senate Majority Whip Dick Durbin, D-Ill., that would authorize states that meet certain criteria to require online retailers to collect sales taxes from out-of-state customers.

Many brick-and-mortar retailers complain that they are losing business to Internet retailers who can offer their products at a discount because, in many cases, they don't have to collect sales taxes. States argue they are losing billions of dollars a year in uncollected taxes from Internet sales, a problem they say will get worse with the growth in e-commerce.

For John Raney, a Texas GOP state representative and owner of the Texas Aggieland Bookstore in College Station, it's "a matter of life and death to small retailers." His bookstore caters to students from Texas A&M University. He says the 8.25 percent sales tax he is required to collect puts him at a significant disadvantage compared to online retailers, particularly for the priciest textbooks.

The Enzi-Durbin-Alexander bill is supported by many retail groups including the Retail Industry Leaders Association, which represents big box stores like Best Buy and Wal-Mart, as well as Amazon, one of the biggest players in the online retail space.

On the other side are eBay and Overstock.com, which argue that the bill would impose a tax on Internet sales and would hurt small businesses that operate on the Internet. If the bill advances, eBay says lawmakers should exempt small businesses.

Rep. Steve Womack, R-Ark., who has introduced a House bill similar to the Senate measure, with Rep. Jackie Speier, D-Calif., agrees that supporters must dispel claims that the bill would impose a tax on the Internet. He and others note that the measure would not authorize a new tax but give states a way to collect sales taxes they are already owed. "We need to get through the fog," said Womack, who urged the coalition to target GOP members of the House Judiciary Committee. The panel held a hearing on the issue last year but has not marked up Womack's bill.

Even with the coalition's lobbying push, both the House and Senate bills face long odds of passing before this fall's election. Some supporters acknowledge that the issue may have to wait until next year or possibly for a lame duck session following November's election.

Supporters of legislation that would require online retailers to collect sales taxes from customers in states where those firms have no store or other facility have some high-profile support from a leading Tea Party figure.

Last week, Gov. Paul LePage, R-Maine, wrote his state's two U.S. senators, Republicans Susan Collins and Olympia Snowe, to urge them to back legislation introduced by Sens. Mike Enzi, R-Wyo., Dick Durbin, D-Ill., and Lamar Alexander, R-Tenn., that would close a loophole left by a 1992 Supreme Court decision. The high court ruled that states can't require retailers such as catalog and now online retailers to collect sales taxes from customers in states where those companies have no physical presence.

"There's no denying that passing the bill would give thousands of small Maine businesses a real boost," LePage wrote. "Through no fault of their own, federal policy now gives some out-of-state corporations an unfair advantage over other Maine retailers."

LePage, like many other Tea Party activists, has called for lowering taxes on Americans. However, LePage echoed congressional supporters in insisting the Senate bill does not authorize any new taxes but would instead allow states that meet certain conditions to require retailers to collect sales taxes that are already owed by consumers.

States say they are losing billions in uncollected taxes on Internet sales, while brick-and-mortar stores argue that online-only stores have an unfair advantage. Durbin, who also serves as Senate majority whip, said he would like get more GOP support for the bill to help attract the 60 votes needed to overcome a likely filibuster of the legislation. So far, three other Republicans besides Enzi and Alexander have signed on as co-sponsors while six Democrats are co-sponsors.

The bill has won broad support from some major players in the retail industry including brick-and-click companies like Target and Wal-Mart, as well as Amazon, even though it has fought some state-level efforts to close the sales tax loophole. Representatives from a coalition of companies that support the bill are coming to Washington Wednesday to lobby members of Congress to support the legislation.

The bill is opposed primarily by eBay and Overstock as well as by the influential anti-tax group Americans for Tax Reform. However, the group has not said whether it would consider a vote in favor of the Senate bill as a violation of its no-tax increase pledge, which has been signed by most congressional Republicans and many GOP state officials including LePage. A spokesman for the group said it is waiting to see if the bill changes as it progresses through Congress.

Three dozen state attorneys general are demanding that Google CEO Larry Page meet with them to find a way to allay their concerns over the company's proposed privacy changes, which also have prompted scrutiny from Congress.

Google said last month that it would be consolidating many of its privacy policies and would track and gather data about users when they move from one Google service to another.

"Given all of our serious concerns, and given our obligation to protect consumers within our states, we request to meet with you as soon as possible to work toward a solution that will best protect the privacy needs of those who use Google's products," the 36 states attorneys general wrote in a letter sent to Page on Wednesday. The top prosecutors, led by Douglas Gansler of Maryland and Robert McKenna of Washington state, demanded a reply by Feb. 29.

The attorneys general outlined several concerns with Google's changes, set to go into effect March 1. They worry that users will not be able to effectively opt out of being tracked by Google and having that data combined with other information the company gathers from users of its products. While some users can choose to stop using Google products, changing services could be costly for businesses and other users who rely on Google for e-mail and other products, or use mobile phones with the Google Android operating system.

"On a fundamental level, the policy appears to invade consumer privacy by automatically sharing personal information consumers input into one Google product with all Google products," the letter added. "Consumers have diverse interests and concerns, and may want the information in their Web History to be kept separate from the information they exchange via Gmail."

Google has argued that it is not collecting any new data and that it offers users many tools to control the level of privacy they want.

"Our updated Privacy Policy will make our privacy practices easier to understand, and it reflects our desire to create a seamless experience for our signed-in users," Google said in a statement Wednesday. "Of course we are happy to discuss this approach with regulators globally."

Meanwhile, the Center for Digital Democracy filed a complaint with the Federal Trade Commission Wednesday against Google's privacy changes, saying they violate the privacy agreement the company reached last year with the commission. Other groups have made similar claims. The Electronic Privacy Information Center has called on a federal court to order the FTC to enforce its settlement against Google.