Internet retail operations have gained an edge on their brick-and-mortar counterparts by their easy availability and smaller overhead. But there is one area where they have an unfair advantage, and that is in sales taxes. There's no question that those shopping at local stores will be paying sales taxes. Not so, with Internet purchases.
The Senate has passed a bill to enable states to uniformly collect sales taxes on Internet purchases, though giving small retailers an exemption. The need for House action on the bill became more evident last week, as the U.S. Supreme Court effectively voided its 20-year-old ruling that states could only collect sales taxes on retailers with a physical presence in the state.
The Court declined to hear a challenge by major Internet retailers Amazon and Overstock to New York state's 2008 law requiring out-of-state Internet vendors to collect sales tax on purchases by New York residents.
That means that other states can follow New York's lead, creating a far-from-uniform approach to this issue. States rightly see the online tax break as a revenue loser as well as a disadvantage for local retailers competing with big nationwide firms.
But companies like Amazon see a potential nightmare in trying to comply with many different state and local tax ordinances.
The Senate bill, the Marketplace Fairness Act, would set uniform standards for out-of-state retailers to collect the relevant sales taxes. It's an equitable solution that needs to be broadly applied.