Target, Wal-Mart, Others Aim to Close Loophole for Online Sellers

Wal-Mart Stores Inc., Target Corp., and other large retailers are backing a coalition called the Alliance for Main Street Fairness, which is leading efforts to change sales-tax laws in more than a dozen states including Texas and California. The changes would force Amazon.com Inc. and other similar online outlets to collect sales taxes.

Until now, the Alliance has been largely associated with mom-and-pop stores, spotlighting stories of small toy shops and booksellers who argue Internet merchants that aren’t legally required to collect sales taxes enjoy an unfair advantage with shoppers. Many of America’s largest store chains—including Wal-Mart, Target, Best Buy Co., Home Depot Inc., and Sears Holdings Corp. —are now involved in the campaign, lobbying legislators and increasingly taking public swipes at Amazon.

The online retailer says it complies with the law. Under a 1992 U.S. Supreme Court ruling, only merchants who have a physical presence, such as stores, in a state have to collect sales taxes. Amazon currently gathers those taxes in just five states: Kansas, Kentucky, North Dakota, its home base of Washington, and New York.

U.S. Sens. Richard Durbin, an Illinois Democrat, and Mike Enzi, a Wyoming Republican, are considering more direct legislation to force online retailers to collect sales taxes, people familiar with the matter said.