WASHINGTON – Three online shopping giants clashed Wednesday over a proposal by Rep. Steve Womack to have them collect state and local sales taxes.

WASHINGTON – Three online shopping giants clashed Wednesday over a proposal by Rep. Steve Womack to have them collect state and local sales taxes.

The House Judiciary Committee heard testimony from representatives of Amazon, Overstock and eBay on Wednesday that showcased differing views on the fairness of such a plan.

So-called “brick and mortar” retailers say they are losing sales to online competitors because of sales taxes. While local stores must collect sales tax, out-of-state Internet retailers do not. Although consumers legally owe the tax, they seldom pay the “use” tax – resulting in a price break for online shopping.

Womack, R-Rogers, has co-sponsored legislation with Rep. Jackie Speier, D-Calif., to level the playing field by requiring most online retailers to collect the state and local taxes that are due.

“We have an inequity that only Congress can fix,” Womack said Wednesday.

Womack sat in the audience during the hearing that lasted more than two hours as members of the Judiciary Committee questioned a panel that included the online retailers as well as a small business owner and officials from Indiana and Texas who support the bill.

Paul Misener, a vice president at Amazon.com, said that with today’s technology the task of collecting and remitting sales taxes would not pose a major burden to Internet retailers.

“Congress should help address the states’ budget shortfalls without spending federal funds, by authorizing the states to require collection of the billions of revenue dollars already owed,” he said.

Patrick Byrne, chairman of Overstock.com, saw it differently. He said that it would be a burden to collect taxes for the 9,746 unique jurisdictions in the nation.

“We oppose the pending bills because they outsource to retailers, without compensation, the burden of collecting taxes from residents of states where those retailers have no physical presence,” Byrne said.

Tod Cohen, a vice president at eBay Inc., said that changing the tax law would harm rather than help small retailers by making it more difficult for them to enter the global marketplace.

Thousands of small retailers use eBay to augment their in-store business. Requiring them to collect sales taxes may close the door on that option, he argued. That would leave the growing Internet market in the hands of big box retailers that have an established online presence.

“They want to draw up the drawbridge after themselves,” Cohen said.

After the hearing, Womack said that his bill seemed to enjoy significant support from members of the Judiciary Committee.

Most of the committee concerns focused not on whether to require online collection but on which companies should be exempted.

Womack’s bill provides an exemption for companies that do less than $1 million in online sales each year. Arguments were raised for having a higher threshold to exempt more small businesses while others argued for no exemption.

Womack said he is not cemented to the $1 million exemption but wants some break for small companies entering the online retail world.