A measure to require online merchants affiliated with companies such as Amazon and Overstock.com to collect state sales taxes cleared the Senate on Tuesday.
The bill - sponsored by Sen. Emmett W. Hanger Jr., R- Augusta County, and backed by the Virginia Retail Federation - would require state-based businesses that affiliate with major multinational online retailers to collect 5 percent state and local sales and use taxes. The Senate approved the measure 28-12.
In such cases, the major online firms serve almost as wholesalers for Virginia-based Internet businesses that feature their hyperlinked banner ads. The local company receives a share of the sale, a transaction on which no sales tax is paid.
The legislation would put these online retailers on the same footing as online and brick-and-mortar shops that collect sales taxes.
"This is a situation that has been allowed to continue for far too long," Retail Alliance President and Chief Executive Susan Milhoan said in a news release. "Most Internet retailers are in compliance with state law, and this legislation gets at those few who are benefiting from a small loophole and costs Virginia millions in lost revenue."
The bill could generate as much as $17 million for the state, but that depends on whether online retailers participate, the economic impact statement said. Online retailers might sue, as Amazon and Overstock.com did in New York. In that case, the revenue gains would be offset by litigation costs, the impact statement said.
The AP contributed to this report.
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OTHER ACTION: SENATE APPROVES AUTISM BILL
Legislation that would compel insurers to pay for expensive but effective treatments for children with autism won overwhelming passage Tuesday in the state Senate despite opposition from insurance and business lobbies.
On a 27-13 vote, Sen. Janet Howell's bill advances to the House, where a companion measure died on a tie vote in a subcommittee two weeks earlier.
The bill would mandate coverage by certain employee health plans for applied behavior analysis, the treatment that psychiatric and medical officials say is the most effective and promising for children with autism. Insurers say ABA is an educational service, not a medical one that should be covered.
- The Associated Press