Senate passes Internet sales tax bill

The U.S. Senate on Monday approved a controversial bill by more than a 2-to-1 margin that would allow states to levy taxes on Internet purchases.

The Marketplace Fairness Act, which would allow states to require online vendors to collect sales and use tax on certain out-of-state purchases, was approved in a bipartisan vote of 69 to 27. The bill, which already has the support of President Obama, will now move on to the House of Representatives.

If approved, the bill would overturn a 1992 Supreme Court ruling that found out-of-state retailers generally don't have to collect taxes unless they have a sufficient business presence. The bill, officially known as S.743, does include an exception for businesses that make under $1 million a year in revenue.

Backers of the bill, including Walmart, Macy's, and Best Buy, argue that online retailers often do not collect sales taxes at checkout and thus enjoy an unfair competitive advantage over the big-box stores. The Marketplace Fairness Coalition, a group of companies supporting the legislation, says the act would "level the playing field."