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Senate bill jeopardizes tax-free online shopping

Bill requiring Net retailers to collect sales tax passes test

WASHINGTON — States could force Internet retailers to collect sales taxes under a bill that overwhelmingly passed a test vote in the Senate Monday.

Under current law, states can only require stores to collect sales taxes if the store has a physical presence in the state. As a result, many online sales are essentially tax-free, giving Internet retailers a big advantage over brick-and-mortar stores.

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The bill would allow states to require online retailers to collect state and local sales taxes for purchases made over the Internet. The sales taxes would be sent to the states where shoppers live.

The Senate voted 74 to 20 to begin debating the bill. If that level of support continues, the Senate could pass the bill as early as this week.

Supporters say the bill is about fairness for businesses and lost revenue for states. Opponents say it would impose complicated regulations on retailers and doesn’t have enough protections for small businesses. Businesses with less than $1 million a year in online sales would be exempt.

President Obama supports the bill, but its fate is uncertain in the House, where some Republicans regard it as a tax increase.

Amazon.com backs the bill, but eBay has been rallying customers to oppose it.

The bill is also opposed by senators from states that have no sales tax, including Senator Kelly Ayotte, a New Hampshire Republican. ‘‘Supporters of this online sales tax bill are trying to muscle it through before senators find out how disastrous it would be for businesses in their states,’’ Ayotte said.

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