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Old online sales tax bill resurrected in new Senate

One of the benefits of a do-nothing Congress, at least from lawmakers' perspective, is that all the uncompleted work offers easy starting points for "new" legislation.

Look at tax reform. The current Senate Finance Committee essentially is using the tax code overhaul playbook established by members in the 113th Congress.

Now we have the latest iteration of online sale tax legislation.

This week a bipartisan group of Senators introduced the Marketplace Fairness Act of 2015. It's basically the Marketplace Fairness Act of 2013, which was introduced two years ago by the same core group of sponsors.

Online shopping computer keyboard2

The earlier bill passed the Senate in May 2013 by a 69-27 vote. It stalled, however, in the House. Efforts to get it considered in the last lame duck session failed, and the bill died.

Now it's back.

As before, the latest bill would give states the option to require out-of-state businesses, notably online or catalog sellers, to follow local physical businesses and collect sales taxes from buyers.

There's an exemption for businesses with less than $1 million in annual gross receipts from remote sales if the state adopts and implements specified simplification requirements.

Tax burden or tax fairness? Each time a version of this bill is dropped in the hopper -- the Marketplace Equity Act and Main Street Fairness Act were introduced in the House and Senate, respectively, in 2011 -- it picks up a little more steam.

Each reintroduction of an online sales tax measure also reignites the same debate.

Opponents argue that the process will be extraordinarily complex and harm interstate commerce.

"Despite what some supporters claim, this legislation is bad news for conservative principles and the cause of limited government," wrote Andrew Moylan, executive director and senior fellow for R Street, a Washington, D.C.-based think tank. "It would dismantle proper limits on state tax-collection authority while causing serious damage to electronic and interstate commerce."

Moylan's opposition to the Marketplace Fairness Act was spelled out in an open letter to U.S. Senators. The communique was signed by 17 other leaders of conservative groups, including Grover Norquist of Americans for Tax Reform and no-tax pledge fame.  

Supporters say passage is crucial for the survival of brick-and-mortar retailers that are increasingly undercut by online sellers.

"Ending the special tax treatment afforded online-only retailers has been a top legislative priority for the retail industry, and it's time to finish the job in 2015," said Joe Rinzel, senior vice president for government affairs for the Retail Industry Leaders Association (RILA), in a statement following the Senate bill's introduction. "All retailers deserve a fair shot to compete in the free market without the government's thumb on the scale."

The measure also is supported by the National Governors Association (NGA). The day before the Senate measure was introduced, NGA Executive Director Dan Crippen wrote House Speaker John A. Boehner (R-Ohio), urging him to move quickly on online sales tax legislation.

Will that happen in this new Congress? Or will the latest online sales tax measure go the way of its predecessors and start the cycle over once again?

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