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Coverage of Virginia politics and the 2014 election.

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Senate eyeing Internet sales tax bill this week; affects Va transportation bill

The U.S. Senate this week may vote on a bill that would let states require online retailers to collect and send to the states the sales tax on online purchases.

You can read more about where things stand on the vote — which could happen this week — here:

Sen. Mark Warner said he backs the bill, which would let states compel online retailers to collect sales taxes on customers’ purchases. The bill before the Senate applies to retailers that have  more than $1 million a year in sales.

Virginia leaders are watching the bill’s progress because Gov. Bob McDonnell’s transportation funding reform legislation counts on revenue that the state might get if the federal bill passes.

It’s estimated that Virginia would receive millions of dollars more in sales tax revenue if Internet sales were taxed, and the transportation bill allots some of that expected revenue to transportation and some to education.

If Congress doesn’t pass an online sales tax bill by 2015, the transportation bill’s language requires an additional increase in the sales tax on gas. (The transportation bill eliminates the current 17.5 cents-per-gallon gas tax, replacing it with a 3.5 percent sales tax on gas at the wholesale level. If Congress doesn’t act on the Internet sales tax bill by 2015, that gas tax will go up to 5.1 percent.)

The issue of online sales tax collection has been a thorny one for years. Under a years-old court ruling, states can’t collect sales tax from a retailer that doesn’t have a “physical presence” in their state. Virginia, like many states, requires residents to voluntarily pay sales tax on items purchased online, but few people do so.

Bricks-and-mortar retailers have been pushing for the federal bill, because they say online retailers have an unfair advantage, since people who buy an item online don’t have to pay the sales tax.

You can read more about the issue here: