Internet Sales Tax Bill Faces Battle in House

WASHINGTON (AP) — Traditional retailers and cash-strapped states face a tough sell in the House as they lobby Congress to limit tax-free shopping on the Internet. The Senate voted 69 to 27 Monday to pass a bill that empowers states to collect sales taxes from Internet purchases.

Under the bill, states can require out-of-state retailers to collect sales taxes when they sell products over the Internet, in catalogs, and through radio and TV ads. The sales taxes would be sent to the states where a shopper lives.

Current law says states can only require retailers to collect sales taxes if the merchant has a physical presence in the state. As a result, many online sales are tax-free. The bill faces opposition in the House, where some lawmakers regard it as a tax increase.