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Virginia Takes Center Stage In Debate on Internet Sales Taxes

Monday, March 4, 2013
ByMarc Heller

Virginia may offer the most hope--and the toughest chances--for a proposal to boost sales tax collection from online retailers.

Partly because of Gov. Bob McDonnell's (R) transportation plan that relies on tax revenue from remote sales, and partly because of the roles of two political heavyweights representing Virginia in Congress, the Old Dominion has fast become the new focus in passing sales tax legislation through the House.

Lobbyists following the issue told BNA they see two players, House Majority Leader Eric Cantor (R-Va.) and the new chairman of the House Judiciary Committee, Rep. Bob Goodlatte (R-Va.), as critical to the bill's passage. So far, neither has endorsed giving states authority to compel online retailers elsewhere to collect sales tax on behalf of the state where a customer lives.

States Lose Billions

Without federal legislation to clear the way for sales tax collections, states will continue to lose billions in uncollected revenue, the National Governors Association has said. The association estimates states lose $23 billion a year from uncollected taxes on remote sales.

The issue has been percolating for years, beginning with catalog sales in the days before the Internet. Those were the basis for the 1992 U.S. Supreme Court decision, Quill v. North Dakota, in which the court declared that only Congress could give states authority to collect sales taxes on remote sales across state lines.

Goodlatte's committee will consider the legislation (H.R. 684), the Marketplace Fairness Act. Cantor sets the agenda for which bills reach the House floor. And McDonnell has stepped to the forefront of the issue nationally by hinging lower gas taxes on the eventual collection of more taxes on remote sales.

Cantor has not publicly stated his position on the issue; a spokeswoman did not return an email from BNA seeking comment.

Goodlatte, asked for comment the week of Feb. 25, told BNA, “We're working on it. It's got a long way to go. That's all I'm going to say.”

By Marc Heller

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