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Amazon appears to be conceding the sales-tax war in Virginia, where it wants a physical presence.
Earlier this year, online sales giant Amazon agreed to start collecting sales tax from Virginia customers in September 2013.
Now a group of Virginia business organizations that advocated for that deal is taking its message to the federal level.
The Virginia Main Street Leadership Council--with members including the Virginia Retail Merchants Association and several individual companies--plans to lobby Congress to pass a federal law that would require most online retailers to collect and remit sales taxes.
The group says it's an issue of fairness--bricks-and-mortar stores are competing with online retailers, and it's not a level playing field if one charges customers sales tax and the other doesn't.
Currently, states can't collect sales tax from an online retailer that doesn't have a physical presence in the state.
Federal legislation could remove the "physical presence" rule.
Physical presence isn't
But with online retailers, the lines are fuzzier. People regularly make online purchases from companies that don't have so much as a storefront in the customer's state. And while technically you, the customer, are supposed to pay to the state the sales tax on those purchases, few people do.
The reason why Virginia--after several years of failed attempts--has finally gotten Amazon to agree to collect the sales tax is that Amazon is building distribution centers in Virginia.
That deal also will apply to any other out-of-state Internet retailer that has a physical presence, including a distribution center, in Virginia.
Amazon appears to be conceding the sales-tax war in states such as Virginia where it wants to build a distribution center or another sort of physical presence.
Last week, the company agreed to collect sales tax in two more states, Texas and Nevada.
But what the Virginia Main Street group wants--and what Amazon itself wants, according to public statements from its representatives--is a federal law that applies to all states and all (or almost all) online retailers, rather than a piecemeal state-by-state approach.
Rob Shinn with the Alliance for Main Street Fairness said it's time for federal law to reflect modern technology and consumer patterns.
"With the rise of Internet sales in particular in the last few years, there's a growing recognition that the old laws with regard to this issue are outdated and need to be brought into the 21st century," Shinn said. "So what the federal bill would do is it would basically authorize states, or give them the authority, to collect sales tax no matter whether the seller had a physical presence in the state or not."
Shinn said one issue still to be worked out in such federal legislation is how to exempt small online sellers, such as people who want to sell something on eBay.
But he thinks support for a federal bill generally is growing in Washington.
"I think there is growing momentum at the federal level and growing recognition that something has to happen, because Internet sales are becoming such a growing part of retail commerce, states can't just afford to lose all that revenue stream without it being replaced by something," Shinn said.
The revenue isn't small potatoes. In Virginia, estimates are that Amazon's collection of sales tax from Virginia customers could generate as much as $24 million in new revenue for state and local governments.
Chelyen Davis: 540/368-5028