Internet sales tax bill faces tough sell in House

WASHINGTON (AP) — Traditional retailers and cash-strapped states face a tough sell in the House as they lobby Congress to limit tax-free shopping on the Internet.

The Senate voted 69 to 27 Monday to pass a bill that empowers states to collect sales taxes from Internet purchases. Under the bill, states could require out-of-state retailers to collect sales taxes when they sell products over the Internet, in catalogs, and through radio and TV ads. The sales taxes would be sent to the states where a shopper lives.

Current law says states can only require retailers to collect sales taxes if the merchant has a physical presence in the state.

That means big retailers with stores all over the country like Wal-Mart, Best Buy and Target collect sales taxes when they sell goods over the Internet. But online retailers like eBay and Amazon don't have to collect sales taxes, except in states where they have offices or distribution centers.

"This bill is about fairness," said Sen. Mike Enzi, R-Wyo., the bill's main sponsor in the Senate. "It's about leveling the playing field between the brick and mortar and online companies and it's about collecting a tax that's already due. It's not about raising taxes."

The bill got bipartisan support in the Senate but faces opposition in the House, where some lawmakers regard it as a tax increase. Grover Norquist, the anti-tax advocate, and the conservative Heritage Foundation oppose the bill, and many Republicans have been wary of crossing them.

Supporters say the bill is not a tax increase. In many states, shoppers are required to pay unpaid sales tax when they file their state tax returns. However, states complain that few taxpayers comply.

"Obviously there's a lot of consumers out there that have been accustomed to not having to pay any taxes, believing that they don't have to pay any taxes," said Rep. Steve Womack, R-Ark., the bill's main sponsor in the House. "I totally understand that, and I think a lot of our members understand that. There's a lot of political difficulty getting through the fog of it looking like a tax increase."

House Speaker John Boehner, R-Ohio, has not commented publicly about the bill, giving supporters hope that he could be won over. Rep. Bob Goodlatte, R-Va., chairman of the House Judiciary Committee, which would have jurisdiction over the bill, has cited problems with the legislation but not rejected it outright.

"While it attempts to make tax collection simpler, it still has a long way to go," Goodlatte said in a statement. Without more uniformity in the bill, he said, "businesses would still be forced to wade through potentially hundreds of tax rates and a host of different tax codes and definitions."

Goodlatte said he's "open to considering legislation concerning this topic but these issues, along with others, would certainly have to be addressed."

Internet giant eBay led the fight against the bill in the Senate, along with lawmakers from states with no sales tax and several prominent anti-tax groups. The bill's opponents say it would put an expensive obligation on small businesses because they are not as equipped as national merchandisers to collect and remit sales taxes at the multitude of state rates.

Businesses with less than $1 million in online sales would be exempt. EBay wants to exempt businesses with up to $10 million in sales or fewer than 50 employees.

"The contentious debate in the Senate shows that a lot more work needs to be done to get the Internet sales tax issue right, including ensuring that small businesses using the Internet are protected from new burdens that harm their ability to compete and grow," said Brian Bieron, eBay's senior director of global public policy.

Some states have sales taxes as high as 7 percent, plus city and county taxes that can push the combined rate even higher.

Many governors — Republicans and Democrats — have been lobbying the federal government for years for the authority to collect sales taxes from online sales.

The issue is getting bigger for states as more people make purchases online. Last year, Internet sales in the U.S. totaled $226 billion, up nearly 16 percent from the previous year, according to government estimates.

States lost a total of $23 billion last year because they couldn't collect taxes on out-of-state sales, according to a study done for the National Conference of State Legislatures, which has lobbied for the bill. About half of that was lost from Internet sales; half from purchases made through catalogs, mail orders and telephone orders, the study said.

Supporters say the bill makes it relatively easy for Internet retailers to comply. States must provide free computer software to help retailers calculate sales taxes, based on where shoppers live. States must also establish a single entity to receive Internet sales tax revenue, so retailers don't have to send it to individual counties or cities.

Opponents worry the bill would give states too much power to reach across state lines to enforce their tax laws. States could audit out-of-state businesses, impose liens on their property and, ultimately, sue them in state court.

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Senate passes bill letting states tax online sales

WASHINGTON (AP) — The Senate aimed to help traditional retailers and financially strapped state and local governments Monday by passing a bill that would widely subject online shopping — for many a largely tax-free frontier — to state sales taxes.

The Senate passed the bill by a vote of 69 to 27, getting support from Republicans and Democrats alike. But opposition from some conservatives who view it as a tax increase will make it a tougher sell in the House. President Barack Obama has conveyed his support for the measure.

Under current law, states can only require retailers to collect sales taxes if the store has a physical presence in the state.

That means big retailers with stores all over the country like Wal-Mart, Best Buy and Target collect sales taxes when they sell goods over the Internet. But online retailers like eBay and Amazon don't have to collect sales taxes, except in states where they have offices or distribution centers.

As a result, many online sales are tax-free, giving Internet retailers an advantage over brick-and-mortar stores.

"We ought to have a structure in place in the states that treats all retail the same," said Matthew Shay, president and CEO of the National Retail Federation. "Small retailers are collecting (sales tax) on the first dollar of any sale they make, and it's only fair that other retailers who are selling to those same customers the same product have those same obligations."

The bill would empower states to require businesses to collect taxes for products they sell on the Internet, in catalogs and through radio and TV ads. Under the legislation, the sales taxes would be sent to the state where the shopper lives.

Supporters say the current tax disparity is turning some traditional stores into showrooms, where shoppers pick out items they like, then buy them on the Internet to avoid sales taxes.

"It's about the way commerce has changed in America," said Sen. Dick Durbin, D-Ill. "Bookstores, stores that sell running shoes, bicycles and appliances are at a distinct disadvantage. They've become showrooms."

Internet giant eBay is leading the fight against the bill, along with lawmakers from states with no sales tax and several prominent anti-tax groups. The bill's opponents say it would put an expensive obligation on small businesses because they are not as equipped as national merchandisers to collect and remit sales taxes at the multitude of state rates.

"Giant retailers have a requirement to collect sales taxes nationwide because they have physical presence nationwide," eBay president John Donahoe wrote in an online column over the weekend. "Likewise, today small retail stores and online retailers collect sales taxes for the one state where they are located. That's a fair requirement."

"If the bill passes, small online businesses would have the same tax compliance obligations and face the same enforcement risks as giant retailers, despite the fact that they are usually located in just one state."

Businesses with less than $1 million in online sales would be exempt. EBay wants to exempt businesses with up to $10 million in sales or fewer than 50 employees.

Some states have sales taxes as high as 7 percent, plus city and county taxes that can push the combined rate even higher. For example, the combined state and local sales tax is 9 percent in Los Angeles and 9.25 percent in Chicago. In New York City, it's 8.5 percent and in Richmond, Va., 5 percent. In many states, shoppers are already required to pay unpaid sales tax when they file their state income tax returns. However, states complain that few taxpayers comply.

Many governors — Republicans and Democrats — have been lobbying the federal government for years for the authority to collect sales taxes from online sales.

The issue is getting bigger for states as more people make purchases online. Last year, Internet sales in the U.S. totaled $226 billion, up nearly 16 percent from the previous year, according to government estimates.

States lost a total of $23 billion last year because they couldn't collect taxes on out-of-state sales, according to a study done for the National Conference of State Legislatures, which has lobbied for the bill. About half of that was lost from Internet sales; half from purchases made through catalogs, mail orders and telephone orders, the study said.

Supporters say the bill makes it relatively easy for Internet retailers to comply. States must provide free computer software to help retailers calculate sales taxes, based on where shoppers live. States must also establish a single entity to receive Internet sales tax revenue, so retailers don't have to send it to individual counties or cities.

Opponents worry the bill would give states too much power to reach across state lines to enforce their tax laws. States could audit out-of-state businesses, impose liens on their property and, ultimately, sue them in state court.

In the Senate, lawmakers from three states without sales taxes are leading the opposition: Montana, New Hampshire and Oregon. They argue that businesses based in their states should not have to collect taxes for other states.

Delaware also has sales tax, though Delaware's two senators support the bill.

Grover Norquist, an anti-tax advocate, and the conservative Heritage Foundation oppose the bill, and many Republicans have been wary of crossing them.

Even so, the issue has a bipartisan flavor. The main sponsor, Sen. Mike Enzi, is a conservative Republican from Wyoming. He has worked closely with Durbin, a liberal Democrat.

In the House, Republican Speaker John Boehner has not commented publicly about the bill, giving supporters hope that he could be won over.

Rep. Bob Goodlatte, R-Va., chairman of the House Judiciary Committee, which would have jurisdiction over the bill, has cited problems with the legislation but not rejected it outright.

"While it attempts to make tax collection simpler, it still has a long way to go," Goodlatte said in a statement. Without more uniformity in the bill, he said, "businesses would still be forced to wade through potentially hundreds of tax rates and a host of different tax codes and definitions."

Goodlatte said he's "open to considering legislation concerning this topic but these issues, along with others, would certainly have to be addressed."

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Follow Stephen Ohlemacher on Twitter: http://twitter.com/stephenatap

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Obama OK with morning-after pill sales at age 15

MEXICO CITY (AP) — President Barack Obama said Thursday he was comfortable with his administration's decision to allow over-the-counter purchases of a morning-after pill for anyone 15 and older.

The Food and Drug Administration on Tuesday had lowered the age at which people can buy the Plan B One-Step morning-after pill without a prescription to 15 — younger than the current limit of 17. The FDA decided that the pill could be sold on drugstore shelves near condoms, instead of locked behind pharmacy counters.

Obama, speaking at a news conference while in Mexico, said the FDA's decision was based on "solid scientific evidence."

What's still unclear is whether the administration will prevail on its appeal of a court order that would lift all age limits on purchasers of the pill.

That decision to appeal set off a storm of criticism from reproductive rights groups, who denounced it as politically motivated and a step backward for women's health.

"We are profoundly disappointed. This appeal takes away the promise of all women having timely access to emergency contraception," Susannah Baruch, Interim President & CEO of the Reproductive Health Technologies Project, said in a statement late Wednesday.

"It is especially troubling in light of the Food and Drug Administration's move yesterday to continue age restrictions and ID requirements, despite a court order to make emergency contraception accessible for women of all ages. Both announcements, particularly in tandem, highlight the administration's corner-cutting on women's health," Baruch said. "It's a sad day for women's health when politics prevails."

After the appeal was announced late Wednesday, Terry O'Neill, president of the National Organization for Women, said, "The prevention of unwanted pregnancy, particularly in adolescents, should not be obstructed by politicians." She called it a "step backwards for women's health."

Last week, O'Neill noted, Obama was applauded when he addressed members of Planned Parenthood and spoke of the organization's "core principle" that women should be allowed to make their own decisions about their health.

"President Obama should practice what he preaches," O'Neill said.

In appealing the ruling Wednesday, the administration recommitted itself to a position Obama took during his re-election campaign that younger teens shouldn't have unabated access to emergency contraceptives, despite the insistence by physicians groups and much of his Democratic base that the pill should be readily available.

The Justice Department's appeal responded to an order by U.S. District Judge Edward Korman in New York that would allow girls and women of any age to buy not only Plan B but its cheaper generic competition as easily as they can buy aspirin. Korman gave the FDA 30 days to comply, and the Monday deadline was approaching.

In its filing, the Justice Department said Korman exceeded his authority and that his decision should be suspended while that appeal is under way, meaning only Plan B One-Step would appear on drugstore shelves until the case is finally settled. If Korman's order isn't suspended during the appeals process, the result would be "substantial market confusion, harming FDA's and the public's interest" as drugstores receive conflicting orders about who's allowed to buy what, the Justice Department concluded.

Reluctant to get drawn into a messy second-term spat over social issues, White House officials insisted Wednesday that both the FDA and the Justice Department were acting independently of the White House in deciding how to proceed. But the decision to appeal was certain to irk abortion-rights advocates who say they can't understand why a Democratic president is siding with social conservatives in favor of limiting women's reproductive choices.

Current and former White House aides said Obama's approach to the issue has been heavily influenced by his experience as the father of two school-age daughters. Obama and Health and Human Services Secretary Kathleen Sebelius have also questioned whether there's enough data available to show the morning-after pill is safe and appropriate for younger girls, even though physicians groups insist that it is.

Rather than take matters into his own hands, the Justice Department argued to the 2nd U.S. Circuit Court of Appeals that Korman should have ordered the FDA to reconsider its options for regulating emergency contraception. The court cannot overturn the rules and processes that federal agencies must follow "by instead mandating a particular substantive outcome," the appeal stated.

Social conservatives were outraged by the FDA's move to lower the age limits for Plan B — as well as the possibility that Korman's ruling might take effect and lift age restrictions altogether.

"This decision undermines the right of parents to make important health decisions for their young daughters," said Anna Higgins of the Family Research Council.

If a woman already is pregnant, the morning-after pill has no effect. It prevents ovulation or fertilization of an egg. According to the medical definition, pregnancy doesn't begin until a fertilized egg implants itself into the wall of the uterus. Still, some critics say Plan B is the equivalent of an abortion pill because it may also be able to prevent a fertilized egg from attaching to the uterus, a contention that many scientists — and Korman, in his ruling — said has been discredited.

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Associated Press writers Lauran Neergaard, Josh Lederman and Pete Yost in Washington contributed to this report.

View the original article here

Obama OK with morning-after pill sales at age 15

MEXICO CITY (AP) — President Barack Obama said Thursday he was comfortable with his administration's decision to allow over-the-counter purchases of a morning-after pill for anyone 15 and older.

The Food and Drug Administration on Tuesday had lowered the age at which people can buy the Plan B One-Step morning-after pill without a prescription to 15 — younger than the current limit of 17. The FDA decided that the pill could be sold on drugstore shelves near condoms, instead of locked behind pharmacy counters.

Obama, speaking at a news conference while in Mexico, said the FDA's decision was based on "solid scientific evidence."

What's still unclear is whether the administration will prevail on its appeal of a court order that would lift all age limits on purchasers of the pill.

That decision to appeal set off a storm of criticism from reproductive rights groups, who denounced it as politically motivated and a step backward for women's health.

"We are profoundly disappointed. This appeal takes away the promise of all women having timely access to emergency contraception," Susannah Baruch, Interim President & CEO of the Reproductive Health Technologies Project, said in a statement late Wednesday.

"It is especially troubling in light of the Food and Drug Administration's move yesterday to continue age restrictions and ID requirements, despite a court order to make emergency contraception accessible for women of all ages. Both announcements, particularly in tandem, highlight the administration's corner-cutting on women's health," Baruch said. "It's a sad day for women's health when politics prevails."

After the appeal was announced late Wednesday, Terry O'Neill, president of the National Organization for Women, said, "The prevention of unwanted pregnancy, particularly in adolescents, should not be obstructed by politicians." She called it a "step backwards for women's health."

Last week, O'Neill noted, Obama was applauded when he addressed members of Planned Parenthood and spoke of the organization's "core principle" that women should be allowed to make their own decisions about their health.

"President Obama should practice what he preaches," O'Neill said.

In appealing the ruling Wednesday, the administration recommitted itself to a position Obama took during his re-election campaign that younger teens shouldn't have unabated access to emergency contraceptives, despite the insistence by physicians groups and much of his Democratic base that the pill should be readily available.

The Justice Department's appeal responded to an order by U.S. District Judge Edward Korman in New York that would allow girls and women of any age to buy not only Plan B but its cheaper generic competition as easily as they can buy aspirin. Korman gave the FDA 30 days to comply, and the Monday deadline was approaching.

In its filing, the Justice Department said Korman exceeded his authority and that his decision should be suspended while that appeal is under way, meaning only Plan B One-Step would appear on drugstore shelves until the case is finally settled. If Korman's order isn't suspended during the appeals process, the result would be "substantial market confusion, harming FDA's and the public's interest" as drugstores receive conflicting orders about who's allowed to buy what, the Justice Department concluded.

Reluctant to get drawn into a messy second-term spat over social issues, White House officials insisted Wednesday that both the FDA and the Justice Department were acting independently of the White House in deciding how to proceed. But the decision to appeal was certain to irk abortion-rights advocates who say they can't understand why a Democratic president is siding with social conservatives in favor of limiting women's reproductive choices.

Current and former White House aides said Obama's approach to the issue has been heavily influenced by his experience as the father of two school-age daughters. Obama and Health and Human Services Secretary Kathleen Sebelius have also questioned whether there's enough data available to show the morning-after pill is safe and appropriate for younger girls, even though physicians groups insist that it is.

Rather than take matters into his own hands, the Justice Department argued to the 2nd U.S. Circuit Court of Appeals that Korman should have ordered the FDA to reconsider its options for regulating emergency contraception. The court cannot overturn the rules and processes that federal agencies must follow "by instead mandating a particular substantive outcome," the appeal stated.

Social conservatives were outraged by the FDA's move to lower the age limits for Plan B — as well as the possibility that Korman's ruling might take effect and lift age restrictions altogether.

"This decision undermines the right of parents to make important health decisions for their young daughters," said Anna Higgins of the Family Research Council.

If a woman already is pregnant, the morning-after pill has no effect. It prevents ovulation or fertilization of an egg. According to the medical definition, pregnancy doesn't begin until a fertilized egg implants itself into the wall of the uterus. Still, some critics say Plan B is the equivalent of an abortion pill because it may also be able to prevent a fertilized egg from attaching to the uterus, a contention that many scientists — and Korman, in his ruling — said has been discredited.

___

Associated Press writers Lauran Neergaard, Josh Lederman and Pete Yost in Washington contributed to this report.

View the original article here

Internet sales tax bill to hit roadblock in House

WASHINGTON (AP) — A bill to require Internet shoppers to pay sales taxes for online purchases may be cruising through the Senate but it will soon hit a roadblock in the House.

"There's a lot of political difficulty getting through the fog of it looking like a tax increase," said Rep. Steve Womack, R-Ark., one of the main sponsors of the bill in the House.

The bill would empower states to reach outside their borders and compel online retailers to collect state and local sales taxes for purchases made over the Internet. Under the bill, the sales taxes would be sent to the states where a shopper lives.

Under current law, states can only require stores to collect sales taxes if the store has a physical presence in the state. As a result, many online sales are essentially tax-free, giving Internet retailers an advantage over brick-and-mortar stores.

Womack says the bill is not a tax increase. Instead, he says, it simply gives states a mechanism to enforce current taxes.

In many states, shoppers are required to pay unpaid sales taxes when they file state tax returns. But governors complain that few people comply.

The Senate voted 63-30 Thursday to end debate on the bill, though senators delayed a final vote on passage until May 6, when they return from a weeklong vacation. Opponents hope senators hear from angry constituents over the next week, but they acknowledged they have a steep hill to climb to defeat the bill in the Senate.

President Barack Obama supports the bill.

Senate Democratic leaders wanted to finish work on the bill this week, before leaving town for the recess. But they were blocked by a handful of senators from states without sales taxes.

Oregon, Montana, New Hampshire and Delaware have no sales taxes, though the two senators from Delaware support the bill.

"I think it's going to be interesting for senators to get a response from constituents over this upcoming week," said Sen. Ron Wyden, D-Ore. "I'm not sure that the country knows that something like this coerces businesses all around America to collect other people's sales taxes."

The bill pits brick-and-mortar stores like Wal-Mart against online services such as eBay. The National Retail Federation supports it. And Amazon.com, which initially fought efforts in some states to make it collect sales taxes, supports it, too.

Retailers who have lobbied in favor of the bill celebrated Thursday's vote.

"The special treatment of big online businesses at the expense of retailers on Main Street will soon be a thing of the past," said Bill Hughes of the Retail Industry Leaders Association. "The overwhelmingly bipartisan support for leveling the playing field is rare in today's political environment and paves the way for a level playing field once and for all."

Supporters say the bill is about fairness for local businesses that already collect sales taxes and for states that lose revenue. Opponents say the bill would impose complicated regulations on retailers and doesn't have enough protections for small businesses. Businesses with less than $1 million a year in online sales would be exempt.

Many of the nation's governors — Republicans and Democrats — have been lobbying the federal government for years for the authority to collect sales taxes from online sales.

The issue is getting bigger for states as more people make purchases online. Last year, Internet sales in the U.S. totaled $226 billion, up nearly 16 percent from the previous year, according to Commerce Department estimates.

The National Conference of State Legislatures estimates that states lost $23 billion last year because they couldn't collect taxes on out-of-state sales.

Anti-tax groups have labeled the bill a tax increase. But it gets support from many Senate Republicans who have pledged not to increase taxes. The bill's main sponsor is Sen. Mike Enzi, a conservative Republican from Wyoming. He has worked closely with Sen. Dick Durbin, a liberal Democrat from Illinois.

Under the bill, states that want to collect online sales taxes must provide free computer software to help retailers calculate the taxes, based on where shoppers live. States must also establish a single entity to receive Internet sales tax revenue, so retailers don't have to send them to individual counties or cities.

"Obviously, there's a lot of consumers out there that have been accustomed to not having to pay any taxes, believing that they don't have to pay any taxes," Womack said. "I totally understand that."

But, he added, "It's not a tax increase and states can easily employ the proper software for the people to pay. At the end of the day it becomes more or less a political decision, and I'm not real sure where the House is going to be on it."

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