WASHINGTON -- Some members of the Arkansas delegation said last week that attaching a bill allowing states to collect sales taxes on online purchases to a more popular measure may be enough to get it approved this year after a decade of trying.

Several members of Arkansas' delegation have spent years promoting the measure, known as the Marketplace Fairness Act, which would allow states to collect sales taxes from online retailers. Shortly before Congress' August recess began, supporters added the tax measure to a bill that prohibits states from taxing Internet access. It's the latest bid to get the online purchases tax proposal passed by the end of the year.

A 1992 Supreme Court decision in Quill Corp. v. North Dakota held that, absent a change in federal law, a state cannot make retailers that have no physical locations in that state collect sales taxes. Under current law, consumers are required to pay the sales taxes on online purchases, but few of them do.

Supporters say it is a fairness issue because businesses that have physical locations in a state have to charge sales taxes, while out-of-state online retailers don't. That puts local businesses at a competitive disadvantage, and local governments lose the sales tax revenue that could be used to provide public services, they said.

Opponents say a state shouldn't be legally allowed to require a business operating in another state to pay local taxes. Each state has different state and local tax rates, and it is burdensome to keep track, they said.

A version of the Marketplace Fairness Act co-sponsored by both of Arkansas' U.S. senators was approved in the Senate 69-27 in May 2013.

The Senate bill has sat in the House Judiciary Committee since last summer, along with a House version sponsored by U.S. Rep. Steve Womack, R-Ark., and co-sponsored by fellow Arkansas Republicans U.S. Reps. Tim Griffin and Rick Crawford.

U.S. Rep. Tom Cotton, R-Ark., is not one of the 66 House co-sponsors. He will consider whatever bill reaches the House floor, his spokesman Caroline Rabbitt said Friday.

Committee Chairman Bob Goodlatte, R-Va., has said he had concerns about the bills and laid out changes that he wanted made, but has not amended either bill. Calls and emails to Goodlatte's press secretary were not returned Friday.

Days before the House and Senate left for their five-week August recess, Sen. Michael Enzi, R-Wyo., introduced the Marketplace and Internet Tax Fairness Act. The bill would allow states meeting certain requirements to collect sales taxes from out-of-state businesses that sell more than $1 million a year online.

Arkansas implemented those requirements, called the Streamlined Sales and Use Tax Agreement, in 2008. Twenty-three other states have passed legislation making the changes, which are designed to simplify the tax system across state lines so it's easier for businesses to comply, according to the Streamlined Sales Tax Governing Board.

The bill would also extend for 10 years a law keeping state or local governments from taxing access to the Internet. The current law expires Nov. 1.

In July, the House approved its version of the bill, the Permanent Internet Tax Freedom Act, that would make the ban permanent.

U.S. Sen. John Boozman, R-Ark., who co-sponsored the original Marketplace Fairness bill, would prefer that the ban be permanent but might be willing to accept a shorter ban if it means the sales tax bill can pass, his spokesman Patrick Creamer said.

If the bill is considered, it will likely happen after the Nov. 4 election and before Congress finishes its current session in December, he said.

U.S. Sen. Mark Pryor, D-Ark., co-sponsored the merged legislation proposed in July.

"Consumers today are just as likely to shop online as they are on Main Street," he said in a statement. "This legislation strikes the right balance, providing fairness to consumers, small businesses and states, especially as Arkansas continues to expand Internet access to all parts of the state."

Womack said the best way to pass the Marketplace Fairness Act by the end of the year may be for the Senate to attach it to another bill like the Internet Tax Freedom legislation.

"I can't explain the slow walk through the House. I just can't explain this hesitancy," he said. "I have worked with, pleaded with and asked the chairman of the Judiciary Committee, and our staffs have worked together, we've done everything we know to do to get this bill out of committee and to the floor of the House."

Womack said there may be enough interest to bring the issue back up in the Senate before the end of the year, but time is running out.

"We could expect that there will at least be an attempt to move this legislation," Womack said. "I'm pretty confident that you're going to see an action in the Senate."

Womack said it isn't fair that local businesses are being treated like showrooms.

Tom Denniston, owner of Fort Thompson Sporting Goods in Sherwood, said he first noticed customers testing out equipment, but not buying it, about six years ago.

"We deal with it every day. People come in the store, look at [expensive items], we sell it to them -- we basically tell them what's going on -- and then they go home and order it online because they can save 81/2 [percent] sales tax," he said.

Many online retailers sell products for the manufacturer's advertised price, the same as he does. The difference is Denniston has to charge sales tax, he said.

"I charge sales tax, why don't they charge sales tax?" Denniston said. "It'd put everybody on the same playing field, basically. I don't blame people for saving a buck, but they're not really looking at the whole picture."

He said he does not charge sales tax when he sells items online, but is willing to.

If the House and Senate cannot agree by the end of the year, supporters of the measure will have to start over in January when the new Congress begins.

Several conservative groups that helped elect many newer lawmakers oppose the sales tax change, including Washington-based Americans for Tax Reform and Arlington, Va.-based Americans For Prosperity. Those groups are supporting candidates this year and want the measures considered separately.

Andrew Moylan, executive director of the R Street Institute, a Washington think tank that opposes the legislation, called the effort to attach the Marketplace Fairness Act to a popular bill a gimmick.

"They are playing with fire," Moylan said. "It speaks to the desperation of a lot of the interests that have been pushing this for a long time."

He said many Arkansans oppose the bill, fearing that the tax collection will harm Arkansas-based businesses and give other states too much power.

"They have a kind of base-line understanding that states should be sovereign within their own borders, but that their powers should end at border's edge," Moylan said.

Republicans are expected to gain seats in the November election, which would make passing the measure harder next year, he said. And the bill's supporters may be overly optimistic about its chances this year, he said.

"They have been confidently saying that this bill will pass for the last five years or more," he said. "I think it's an open question at this point."

Metro on 08/31/2014