U.S. Senate edges closer to vote on Internet sales tax

WASHINGTON, April 18 (Reuters) - Legislation giving states the power to compel retailers outside their borders to collect online sales taxes, a touchy subject for Internet merchants, is likely to move forward in the Senate next week.

Senate Majority Leader Harry Reid on Thursday filed a motion in support of the measure. Currently, states rely on consumers to self-report, which they rarely do.

If approved, the change would be a win for brick-and-mortar stores like Wal-Mart Stores Inc, the world's biggest retailer, which backs the legislation.

At the moment, states can only require online merchants with physical stores or affiliates within their borders to collect sales tax, giving online-only retailers such as Amazon.com Inc a price advantage in many markets.

As a result of Reid's motion, the Senate was expected to vote on Monday on whether to end debate and move the measure forward. A vote on the legislation could come later in the week. Backers say they have the 60 votes needed to end debate.

Momentum has been building since 75 of 100 senators last month voted for a nonbinding version of the bill. The road ahead for the measure is bumpier in the House of Representatives, where some Republicans view it as a tax hike.

One House sponsor, conservative Representative Steve Womack, has been lobbying fellow Republicans to support the measure, according to an aide.

 

But Republican Bob Goodlatte, chairman of the Judiciary Committee, where the bill would have to go through, said he is skeptical.

"While it attempts to make tax collection simpler, it still has a long way to go," Goodlatte said.

Womack is from Arkansas, home of Walmart. Amazon.com also supports the measure, but others including eBay Inc oppose it. (Reporting by Kim Dixon and Nanette Byrnes; Editing by Kevin Drawbaugh and Xavier Briand)

By Kim Dixon, Correspondent at Reuters