Tax-free online purchases are closer to extinction with the passage of a measure in the U.S. Senate on Monday.

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The legislation allows states to require taxes be collected for all products sold online; currently, a tax is only applied for buyers in states where the online retailer has a physical presence.

According to John Holub, President of New Jersey Retail Merchants Association, the state is missing out on a significant amount of revenue without the web tax stream. A study conducted a few years ago showed New Jersey would forego more than 300 million dollars per year by 2015 if it fails to collect a sales tax on all Internet purchases.

Holub said, though, the most important impact of the legislation is the benefit it will have on main street, independent retailers in the state.

"No longer will online-only retailers be able to exploit a loophole that allows them to have a competitive advantage over a bricks-and-mortar store," Holub said.

While the no-tax policy was a leg-up for businesses on the Internet in its infancy stage, Holub said it has now reached a breaking point that is truly a disadvantage for the old-fashioned retailer down the block.

"A sale is a sale, and the sales tax has to be collected," Holub continued. "A bricks-and-mortar store has no way of getting around that. What this will do is level the playing field."

Perhaps unbeknownst to New Jerseyans is the fact that one is already responsible for paying sales tax on Internet purchases by itemizing them on their tax forms. Only an estimated one percent follow through with the rule.

The fate of the legislation is uncertain in the House, where some lawmakers see it as a tax increase.