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Tax-Free States May Be Focal Point In Debate Over Internet Sales Taxes

Wednesday, February 20, 2013
By Marc Heller

In the fight to force online retailers to collect sales taxes, attention may soon turn to a state that does not even have a sales tax.

That state would be Montana, home of the chairman of the Senate Finance Committee, Sen. Max Baucus (D-Mont.), whose committee is the first stop for the Marketplace Fairness Act (S. 336), a bill that gives states the power to compel retailers to collect taxes on internet sales to other states.

Baucus, who has not said much publicly about the issue, is emerging as a key figure because of his intention to take up the issue as part of comprehensive tax reform and, lobbyists working on the issue told BNA, his push to have retailers in Montana and other states that do not charge sales taxes exempted from the requirement to collect on behalf of other states.

An exemption would mean that retailers in Montana, for instance, would have no obligation to collect sales tax on purchases made over the internet from customers in New York or other states that do have sales taxes. In those states, consumers would be expected to declare the purchases on their state income tax returns and pay the tax based on their own state's rate--which is already required, although tax professionals say few people know about or follow the procedure.

A spokesman for Baucus did not return email and phone messages Feb. 19 seeking comment on the issue, but several lobbyists working on e-commerce sales tax issues told BNA that an exemption is one of the issues the chairman is discussing.

By Marc Heller

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