It may not be long before people in Tennessee have to start paying sales tax on nearly all online purchases, according to Senator Lamar Alexander. He’s co-sponsoring legislation aimed at ending what’s seen as a tax loophole.

Companies without a brick-and-mortar store in Tennessee haven’t been forced to collect the state and local sales tax on purchases.

The legislation Alexander helped write is called the Marketplace Fairness Act. It gives states a choice on whether to participate. If they do, the states have to supply retailers with the software to calculate the sales tax, which can differ by county.

Governor Bill Haslam has already written a letter in support, and Senator Alexander says he expects the bi-partisan legislation to pass.

“I think I’ve been around long enough and I’ve watched congress long enough to say this is going to happen. If I were a governor, if I were an online retailer, if I were a catalog retailer, I would make my plans to conduct my business in this way.”

The largest online retailer in the country has negotiated with states – including Tennessee – to delay collecting sales tax. But in a statement, Amazon.com calls the proposed federal legislation a “win-win.”

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Highlights of the Marketplace Fairness Act according to its sponsors:

– The legislation requires states to exempt sellers with less than $500,000 in gross remote sales.

– States must provide a single state-level agency to administer all sales and use tax laws, a single audit, and a single return.

– States must provide software and services to remote sellers to facilitate collection, and states must adopt certification procedures for single and consolidated providers to broaden collection software and service options for sellers.

– Sellers are relieved from liability for incorrect tax collection if errors are made in reliance on information provided by the State, and hold sellers harmless for any errors or omissions made by a single or consolidated provider.

– Sellers get 30 days notice of local rate changes.