Senate Fails to Act on Authority for Cities to Collect Sales Taxes

December 7, 2012

By Lars Etzkorn

An effort by three U.S. Senators to add internet sales tax as an amendment to a military spending bill failed last week.

Senators Dick Durbin (D-IL), Mike Enzi (R-WI) and Lamar Alexander (R-TN), proposed a version of the Market Place Fairness Act (S. 1832) as an amendment to the 2012 National Defense Authorization Act, a military spending bill. However, on Monday, the Senate voted to close debate on the defense bill and proceed toward a final vote without considering the sales tax amendment.

The Marketplace Fairness Act and its House counterpart, the Marketplace Equity Act (H.R. 3179), would overturn a 1992 Supreme Court ruling requiring retailers to have a physical presence in a state in order to collect sales tax on goods.

The ability for cities to collect already owed sales taxes was one of several legislative priorities that Salt Lake City Mayor Ralph Becker, NLC's newly-elected Second Vice President, advocated for while he was in Washington, DC this week. The bills would allow state and local governments to collect an estimated $23 billion annually in sales taxes, including $181 million in Utah. Click here to see the amount of uncollected revenue for each state.

A recent poll indicates that the majority of Americans support the idea, describing an online sales tax as "common sense." They also feel that a tax for online purchases would encourage people to buy local and keep tax dollars in their community.

NLC and the bills' sponsors are looking for other opportunities during the lame duck to move a sales tax amendment in both houses of Congress.