Va. Senate committee OKs bill to force online retailers to pay state sales taxes

Va. panel OKs bill to collect tax for online sales

RICHMOND, Va. — A bill that would force online retailers to pay the same Virginia sales taxes as traditional stores advanced Wednesday from a Senate committee.

On a voice vote with only one dissent, the Senate Finance Committee advanced Sen. Emmett Hanger’s measure that would hold companies such as Amazon and Overstock.com as accountable for the tax as “brick-and-mortar” shops.

“Folks, we’ve got to get this playing field leveled,” said Brian Dillistin, owner of The Floor Trader, a Richmond-area carpet and flooring company.

Hanger said that traditional stores have suffered difficulties in an effort to survive a sharp dip in the economy while fending off online competitors that don’t collect the 5 percent state and local sales and use taxes to the price.

Kelly Justice, owner of the Fountain Bookstore in a trendy, historic area of downtown Richmond, said that the drain has put her livelihood on the brink.

“My job is in danger and my ability to do my job and be a good citizen is at risk. The online retailer is not going to contribute physically and with their time” to local causes, Justice said.

Hanger’s bill has the backing of the Virginia Retail Merchants Association.

The bill would collect the tax from state-based businesses that affiliate with major multinational online shopping businesses such as Amazon and Overstock.com.

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.

Opponents argued that the bill would punish only the small Virginia firms because the global cyber-shopping giants would simply sever their state affiliations once those sales are taxed.

Myles Louria, a lobbyist for one opponent — the Northern Virginia Technology Council — argued that the bill would leave the major companies unscathed while killing local online enterprises.

“You’re going to put Virginia businesses out of business if you do that,” said Reggie Jones, a lobbyist for another opponent, Dulles-based AOL. “It looks good, but it doesn’t do what it’s intended to do.”

The measure heads for a vote by the full Senate, probably early next week.