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E-Commerce Sales Tax Bill May Emerge in ‘Fiscal Cliff' Talks After Election

By Marc Heller
Publication Date: 09/26/2012

After languishing in Congress for years, legislation enabling states to collect sales taxes on purchases made online may advance in the lame-duck session of Congress, some lobbyists and policy analysts believe.

Kim Rueben, a senior fellow at the Brookings Institution, said at a Sept. 21 forum on federal tax reform that she believes Congress could pass the legislation after the election as part of the solution to the so-called fiscal cliff—the combination of expiring tax cuts and congressionally ordered budget sequestration that requires deep cuts in spending.

The issue seems to have gained enough traction to move in this Congress, Rueben said.

She was joined in that optimistic view by other panelists, including John Buckley, a professor at Georgetown Law School.

‘New Tax'?

The issue seems to have gained great momentum because of a push by governors on the issue, Buckley said. But another panelist, Harley Duncan, managing director of KPMG LLP, said he believes the issue still carries too much of a perception of being a new tax—and that the label sinks its chances in the Republican-led House.

A Senate aide working on the issue told BNA in an email that Sen. Richard Durbin (D-Il.) continues to look for ways to pass the legislation before the end of 2012.

Two bills are pending in the Senate. One, the Marketplace Fairness Act (S. 1832), is sponsored by Durbin and Sen. Mike Enzi (R-Wyo.). The other is the Main Street Fairness Act (S. 1452), by Durbin. Lobbyists told BNA the bill with Enzi may have more bipartisan backing, but that any final measure will probably be a combination of them all.

Asked if the measure might find a way into the talks on the fiscal cliff, the aide replied, “I wouldn't rule it out.”

A spokesman for the National Retail Federation, Stephen E. Schatz Sr., told BNA he “wouldn't be shocked” if the issue finds a way into the fiscal cliff deliberations. “Conversations continue,” he said.

Making the issue part of the fiscal cliff solution could work around the House Judiciary Committee, where legislation by Rep. Steve Womack (R-Ark.) has shown no sign of advancing after a summer hearing. The chairman of the House committee, Rep. Lamar Smith (R-Texas), has neither endorsed nor opposed the bill (H.R. 3179), titled the Marketplace Fairness Act.

Womack Also Cautiously Optimistic

Womack told BNA in a telephone call recently that he doubted his bill would be considered this year—but called back a few minutes later to say he is more optimistic than he let on about chances the issue could be addressed during the lame-duck session.

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The complete text of this article can be found in the BNA Daily Tax Report, September 26, 2012. For comprehensive coverage of taxation, pension, budget, and accounting issues, sign up for a free trial or subscribe to the BNA Daily Tax Report today. Learn more »

© 2012, The Bureau of National Affairs, Inc.