eBay thinks Internet sales tax bill will hurt small business; Amazon supports measure

WASHINGTON - The cost of shopping online may be going up. The U.S. Senate is expected to vote by the end of the week on a bill that would tax the items you buy online. This tax push is being marketed as a way to level the playing field between online and retail merchants. eBay sent out an email overnight that said this will hurt small business.

Under the bill, sales tax would be collected and paid to the state where you live. Right now, states only require stores to collect sales taxes if the store has a physical presence in the state.

Technically the consumer is supposed to pay the sales tax on internet purchases when you file your taxes but the reality is that's not happening. Only 47,000 people paid this tax in Ohio in 2011. It's estimated the state lost $200 million in sales tax revenue and $600 million in retail activity.

"This bill has nothing to do with imposing any kind of new tax or revenue generator," said Sen. Bob Corker, R-Tenn. "What this law does is allow states that already have laws on the books to carry out the implementation of those" laws.

Businesses with less than a million dollars a year in online sales would be exempt from collecting and remitting the sales tax.

eBay said there should be a threshold that takes into account your sales and the number of employees at a company.

Opponents feel this will be an accounting nightmare as businesses have to deal with more than 9-thousand taxing jurisdictions.

"This is a a dangerous road to travel, and sets precedent for further expansions of state-level tax collection authority," Anti-Tax Guru Grover Norquist said.

The Senate is expected to vote before they leave for vacation at the end of the week.

What do you think of this proposal? Do you think it will level the playing field or hurt businesses? Join the conversation on Twitter and Facebook .

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