Internet sales tax, here we come?

A Senate vote on the first ever Internet sales tax, which is backed by Walmart, Target, and Best Buy, could come as soon as next week.

Dara Kerr Former senior reporter
Dara Kerr was a senior reporter for CNET covering the on-demand economy and tech culture. She grew up in Colorado, went to school in New York City and can never remember how to pronounce gif.
Dara Kerr
2 min read
Dick Durbin, center, the Senate's No. 2 Democrat, believes levying Internet sales taxes on American shoppers is "one that is long overdue." Getty Images

The days of shopping online and being able to duck sales taxes may soon come to an end. The U.S. Senate is slated to vote on the Internet sales tax sometime next week, according to Reuters.

Internet tax supporters, with backing from Walmart, Macy's, and Best Buy, are hoping a Senate vote will give them enough political leverage to require Americans to pay sales tax whenever buying goods online. This could usher in the first national Internet sales tax ever.

According to Reuters, Senate Majority Leader Harry Reid filed a motion on Thursday supporting the proposal. Since Reid filed the motion, the Senate is now expected to vote as soon as Monday on the motion, but it could come later in the week.

The way the law now works is that states can only require Internet retailers with physical stores within their borders to collect sales tax. This means that online shoppers are supposed to self-report sales tax when making purchases -- but many don't.

Still, several major Internet retailers, like Amazon and Apple, which have opened stores and warehouses in more states, are now requiring shoppers to pay sales taxes on Internet purchases. Smaller retailers and eBay sellers, however, are less likely to enforce the self-reported sales tax.

Last month, the Senate voted overwhelmingly, 75 to 24, on a nonbinding version of the bill despite warnings from a handful of senators that the proposal is antibusiness, harmful to taxpayers, and will be a "bureaucratic nightmare."

Besides Walmart, Macy's, and Best Buy, other retails backing the tax include Target, AutoZone, Home Depot, OfficeMax, and the Container Store. They argue that online retailers often do not collect sales taxes at checkout and thus enjoy an unfair competitive advantage over the big box stores.

Those who are against the proposal say that it amounts to a multibillion dollar tax hike on American consumers. Last month, the National Taxpayers Union set up a petition to Congress saying the tax was "really just a way to unleash state tax collectors on the Internet," and 15 conservative groups also sent a letter to members of Congress saying an Internet tax law is "is bad news for conservative principles and the cause of limited government."

Several online tech companies are also against an Internet tax, including eBay, an association of small Internet sellers called WE R HERE, and NetChoice, which includes Facebook, Yahoo, LivingSocial, and AOL as members.

According to Reuters, the measure needs 60 Senate votes for it to move forward.