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Outline of U.S. House Internet tax bill expected Wednesday

WASHINGTON, Sept 17 | Tuesday, 17 Sep 2013
(Reuters) – The general principles of a bill in the U.S. House of Representatives that would clear the way for states to collect sales tax on online purchases will be released on Wednesday, according to sources who have worked on the legislation.

On Tuesday staff of the House Judiciary Committee planned to brief House members’ staff on the principles that Committee Chairman Bob Goodlatte will include in the bill, said the sources, who did not want to pre-empt an announcement by Goodlatte.

Under a 1992 U.S. Supreme Court ruling, a state can tax an Internet purchase only if the sale was made by a company with a physical presence within that state. The Senate passed a bill in May that would allow states to collect sales taxes on online purchases from out-of-state retailers.

The legislation has bipartisan support in the Republican-controlled House, although some members worry it will create burdens on small businesses to collect taxes.

A key point of debate in the bill is how small is small.

Ebay Inc, an online retailer and auction site where many individuals sell used goods, would like the House bill to exempt businesses with under $10 million in out-of-state sales or businesses with fewer than 50 people.

The Senate bill exempts sellers with less than $1 million in nationwide sales. (Reporting By Lisa Lambert; Additional reporting by Kim Dixon)