Taxes

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.

Facebook co-founder Eduardo Saverin fired back at two senators who crafted a bill aimed at Saverin and others who they claim have given up their U.S. citizenship to avoid taxes, the Wall Street Journal reports. National Journal's coverage of the legislation can be found here.

E-Week examines the decisions that led to Facebook's historic initial public offering.

Twitter has come out in support of "do-not-track," which allows consumers to opt out of being tracked online, the Los Angeles Times reports.

All of today's e-Reads can be found on our Tech Page.

New York's attorney general is suing Sprint for $300 million, claiming the wireless carrier failed to collect and pay sales taxes since 2005, USA Today reports.

Facebook may go public on May 17, according to TechCrunch. But the company's COO makes sure she's out the door every evening on time, the Wall Street Journal blogs.

Verizon reported far fewer new mobile phone customers in the first quarter compared with a year ago, perhaps signaling a slowdown in the wireless market's growth, according to the Wall Street Journal.

Verizon is promising to put its marketing weight promoting the new Windows phone in hopes of developing a strong competitor to Apple and Google, Reuters reports.

All of today's e-Reads can be found on our Tech page.

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.

Updated 8:30 pm

House and Senate negotiators on Wednesday were finalizing the details of spectrum legislation that is now expected to be part of a payroll tax cut package.

"We're just about there," House Energy and Commerce Chairman Fred Upton, R-Mich., told reporters. Upton, along with Communications and Technology Subcommittee Chairman Greg Walden, R-Ore., are members of the House-Senate payroll tax conference committee and are working on the spectrum provisions.

Negotiators were trying to finish their work Wednesday night so they could hold a vote in the House as early as Friday on the payroll tax cut package.

The negotiators want to use the spectrum legislation to help pay for the payroll tax cut package. The spectrum legislation would authorize incentive auctions, from which the Federal Communications Commission to could give broadcasters and other spectrum holders a share of the revenues from the spectrum they relinquish. Auctions could raise billions for the Treasury depending on how the legislation is structured. The Congressional Budget Office projected that spectrum legislation approved late last year by Walden's subcommittee and included in the House's version of the payroll tax package would generate $16.7 billion for the Treasury.

"It's all about the money," Communications and Technology Subcommittee ranking member Anna Eshoo, D-Calif., said.

Walden's bill, along with spectrum legislation passed last summer by the Senate Commerce Committee, also authorized funding and frequency for the creation of a national broadband network for public safety officials. How that network should be governed was among several policy issues that divided House and Senate lawmakers and House Republicans and Democrats. The negotiators may decide to leave some of the details of the public safety network to the FCC and the Commerce Department's National Telecommunications and Information Administration to tackle.

"We've made great progress and are very close to a historic milestone--creation of a new nationwide communications network for our first responders," Senate Commerce Chairman Jay Rockefeller, D-W.Va., said in a statement. "My expectation is that we will be able to include this legislative language in the compromise payroll deal that is close to being finalized. Although we continue to hash out some of the finer points of the legislation, the end result should be the same: a new communications network that will save lives and generate economic growth."

Other thorny issues include whether the FCC should be restricted from freeing up more spectrum for unlicensed uses such as Wi-Fi.

Tech firms, wireless carriers and public safety officials have been keen for Congress to move forward on spectrum legislation. "Congress needs to take action before the looming spectrum crisis throws a cold blanket on one of the bright spots in the U.S. economy right now - mobile broadband," Qualcomm Vice President of Government Affairs Alice Tornquist said in a blog post on the issue Wednesday.

TechNet has flown in executives from several tech companies to lobby Congress on Wednesday to act on the group's top priorities, most of which are focused on boosting U.S innovation and competitiveness.

Among those in town for TechNet's 10th annual Washington visit include Cisco Chairman and CEO John Chambers, Sybase Chairman and CEO John Chen, and eHealth Chairman and CEO Gary Lauer.

More than 40 TechNet executives will be meeting with lawmakers from both parties to push for action on investment in research and development; clean energy technologies; tax and immigration reform; expanding free trade; and extending the research and development tax credit, which expired at the end of 2011.

The group also will be pushing lawmakers to pass legislation to free up more spectrum for wireless broadband technologies and to continue to oppose anti-piracy legislation that critics say could harm the integrity of the Internet and innovation.

TechNet has joined several leading tech groups and companies in opposing the two controversial bills, the Senate's Protect IP Act and the Stop Online Piracy Act in the House, aimed at curbing piracy and counterfeiting on foreign websites. The group is scheduled to meet with two of the leading congressional opponents of those bills, Sen. Ron Wyden, D-Ore., and Rep. Darrell Issa, R-Calif., to discuss the issue.

Among the many other lawmakers the executives are scheduled to meet with Wednesday include Senate Minority Leader Mitch McConnell, R-Ky., Senate Majority Leader Harry Reid, D-Nev., House Majority Leader Eric Cantor, R-Va., House Minority Leader Nancy Pelosi, D-Calif., and House Budget Committee Chairman Paul Ryan, R-Wis. The group also has plans to meet with Treasury Department officials and U.S. Trade Representative Ron Kirk.

The TechNet executives also have meetings scheduled with representatives from President Obama's re-election campaign and the campaigns of GOP presidential contenders Newt Gingrich, Mitt Romney, and Rick Santorum.