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Tennessee businesses owners debate online sales tax

Published On: May 07 2013 04:55:50 PM CDT
Updated On: May 06 2013 11:00:00 PM CDT

Internet sales have been on the rise during the past few years. Some shoppers say it's because of the convenience of shopping in your home; others say it's because you don't have to pay sales tax.

BRISTOL, Tenn. -

Internet sales have been on the rise during the past few years. Some shoppers say it's because of the convenience of shopping in your home; others say it's because you don't have to pay sales tax.

On Monday night the U.S. Senate passed a bill that could change that convenience.

Shopping online may save you a few bucks, but we learned it could also hurt some local businesses. "When people buy large [expensive] things they're obviously going to try and get the best price they can," said Mountain Sports owner Bobby Cheers.

That's not always in the store; sometimes it's online.

Businesses like L.C. King Manufactory rely heavily on internet sales. "One-third of all our business is conducted over the internet with probably 90 percent of the internet sales coming outside of the state of Tennessee," said Jack King.

We learned the current law says states can only require businesses to collect sales tax if they are located inside the state. A proposed bill could change that in the future. "I just don't think it’s fair for us to have to collect and pay sales tax on sales made to people outside the state of Tennessee," said King.

If the bill passes, states could require out-of-state businesses to collect sales tax for anything purchased on the internet. That change would help states like Tennessee, who rely heavily on sales tax. "In Tennessee, we have made a conscious decision that we don't want a state income tax. So our revenue is based on a state sales tax," said Tennessee State Representative Jon Lundberg.

We learned that's why states like Tennessee would benefit from the change. "It's important for the state. We're losing revenue from that, that'll come back," said Lundberg.

The proposed limit on tax-free online shopping is leaving business owners with mixed feelings.

"If you can't save quite as much money, then they're going to be more likely to buy locally," said Cheers.

"None of this makes sense, and none of it sounds fair to me," said King.

The proposed bill will now to go the house for a vote. The Senate passed the bill with a 69-to-27 vote.

The only businesses that would be affected by the change are those making more than $1 million a year.