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Ahead of the Bell: Amazon and eBay

November 30, 2011
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SAN FRANCISCO—Executives for Amazon.com Inc. and eBay Inc. plan to make their case Wednesday morning at a House Judiciary Committee hearing on whether states should be allowed to force online retailers to collect sales taxes on customers' purchases.

Over the past several years, a growing number of states have passed laws to compel online retailers to collect taxes on in-state sales just as traditional bricks-and-mortar retailers already do. Online retailers have largely resisted being deputized as tax collectors, citing a 1992 Supreme Court decision that states they must only collect sales taxes in states where they have a physical presence such as an office or a store.

Several senators are currently trying to change this by pushing two different online sales tax bills that could allow states to require Internet companies to collect sales taxes even if they don't have a physical presence in a state.

Consumers are generally required to self-report taxes on items bought online from out-of-state companies, but they rarely do, and the amount of uncollected sales taxes is thought to be in the billions.

At the Wednesday hearing, Paul Misener, Amazon's vice president for global public policy, will speak for the online retailer and Tod Cohen, eBay's vice president and deputy general counsel for government relations, will speak for the online marketplace operator. Seattle-based Amazon supports a federal online sales tax collection rule, while San Jose-based eBay opposes such a law and says it will hurt its small sellers.

Patrick Byrne, CEO and chairman of Salt Lake City-based online retailer Overstock.com Inc. is scheduled to testify as well, along with Dan Marshall, owner of Lansing, Mich.-based Marshall Music Co. Other witnesses set to speak are Texas state Rep. John Otto and Indiana state senator Luke Kenley. Kenley is speaking for the Streamlined Sales Tax Governing Board, which encourages states to simplify their complex sales and use tax codes in hopes that if enough states do so Congress will allow them to require online retailers to collect sales taxes.

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