Proposed taxes on internet sales looming

Reported by: Erik Avanier
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Updated: 4/23/2013 10:23 pm
CHATTANOOGA, Tennessee(WDEF) - Consumers who shop on line might soon pay more for their purchases if a congressional proposal to tax online sales is passed.

The debate is heating up now that the proposal has gain major support in the U.S. Senate.

WDEF traveled to a local mom-and-pop boutique in Chattanooga called Fit for a Queen. It's a small business that sell merchandise both in-store and online.

The owner, Jonathan Moya said he remembers a time when customers opted to purchase a particular name brand of clothing directly from the clothing makers website because the maker had an online sale.

"We did lose some sales to people who were shopping Kiyonna. They came in here an waited for a sale on Kiyonna to go on they took advantage of the sales online," Moya said..

If Congress gets its way, cheaper online sales could soon be a thing of the past. Congress is closer to passing a bill that would allow states to require all internet retailers to collect sales taxes for the state and local government of the buyers. That means if you live in Chattanooga where the sales tax is 2.2% and purchase an item online from a retailer in Chicago where the sales tax is one of the nations highest at 9.2%, you would have to pay that Chicago rate.

Moya says even though his boutique occasionally sells items online, he still supports the proposal because of a $1 million exemption clause.

"It essentially reverses the field of play. Basically as a small operator, since I make less than a million dollars a year, I don't have to charge internet sales tax for anything that's purchased on our online store," Moya said.

Under the proposed bill, online retailer making more than the $1 million are expected collect between $22 and $24 billion in taxes that now goes uncollected.

A final vote on the proposal is expected in the Senate latter this week. It's uncertain as to when the House will take up the bill.

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