U.S. Senate votes to require online businesses collect sales taxes for buyers' home states

Amazon already set to pay here, but others haven't

INDIANAPOLIS - A historic vote in Congress could affect the way Hoosiers pay for purchases online.

The U.S. Senate voted Monday afternoon 70-24 to require online businesses to collect sales taxes on nearly all purchases.

It's a decision that could mean hundreds of millions of dollars for Indiana.

This bill would not impact Amazon.com, which has already agreed to start paying the tax in January, but other online giants that sell to Hoosiers, eBay and Overstock.com, are fighting it strongly.

Indiana Senate Appropriations Committee Chairman Luke Kenley, R-Noblesville, said the state could realize an additional $150 million to $180 million in taxes, enough to offset the repeal of the inheritance tax.

And he said it would help so-called brick-and-mortar businesses located here.

"It gives them a level playing field. So, hopefully, it's a benefit to them, and they can get more business and maybe even have more employees here in Indiana," Kenley said.

Indiana taxpayers are currently required to pay the sales tax when online retailers don't collect it, but almost nobody does.

Retail Council President Grant Monahan called that Use Tax horribly inefficient, and said it's far more efficient to collect it at the point of sale, which this bill would require.

But the bill is stirring up opposition by the Tea Party, which views it as a tax increase that would hurt small businesses that start out online.

"So much of the Internet is put out by folks, middle-class folks, who are running businesses out of their garage," said Tea Party activist David Blank. "They're selling things online. And this is a tax that's going to hurt them specifically."

The proposed federal law requires states that want to collect the tax to adhere to a simplified system for the online businesses to remit their payments, but Indiana is one of 24 states that have already done that. 

So if the federal bill becomes law, Indiana won't have to do anything but wait for the money to start rolling in. 

Before it becomes law, it must still pass the House and be signed by President Obama.

Follow Norman Cox on Twitter: @normancox6

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