Legislation to eliminate a tax loophole that allows online businesses to not collect state sales taxes sailed through the Virginia Senate today.
The so-called "Amazon loophole" bill -- Senate Bill 597, sponsored by Sen. Frank W. Wagner, R-Virginia Beach -- cleared the chamber on a 34-6 vote and now heads to the House of Delegates.
The legislation was lobbied extensively by groups representing Virginia retailers who said the loophole gives online businesses a competitive advantage. In effect, it would require Internet businesses with bricks and mortar facilities in Virginia to collect the state's five percent sales tax on their transactions.
Amazon has a warehouse and data center in Virginia and plans to open two distribution centers in the state under a deal struck with the administration of Gov. Bob McDonnell that provides more than $4 million in state aid. The state and Amazon are still in negotiations.
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