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A Montgomery County state senator plans to reintroduce a bill in the next legislative session to collect taxes from certain online companies, much to the dismay of some business advocates who say the plan won't solve the state's money woes.

Sen. Richard S. Madaleno Jr. (D-Dist. 18) of Kensington first introduced the legislation in the final days of the 2008 session, but the bill did not make it out of the Senate Budget and Taxation Committee — a key panel in Annapolis.

Madaleno said last week that he will refile the bill, which would allow Comptroller Peter V.R. Franchot to collect sales taxes from Maryland affiliates of Amazon and similar online retailers in the state.

The move could generate $7.5 million annually for the state and help plug a multimillion-dollar budget gap next year, Madaleno said.

"By the time we got to it (last time), we were already late into the session, so I think people were a little uncomfortable with moving forward with a change that could have unintended consequences," he said. "With the opportunity to have more time to research it and work through committee, there's a chance to better understand it."

It is still unclear how the taxes would be collected, said Ronald Wineholt, vice president of government affairs for the Maryland Chamber of Commerce. Wineholt was one of a dozen people who testified against the bill last session.

"Even if the bill were passed, it would be very difficult to administer and would not generate the revenue that's expected," he said Aug. 12. "There's a better way to address the sales tax on Internet sales."

Wineholt recommends that the state move toward a streamlined sales tax system, which aims to simplify sales tax administration by defining what can, and cannot, be taxed.

A streamlined tax system could generate more revenue for the state, but that plan requires congressional action, said Thomas S. Saquella, president of the Maryland Retailers Association, which supports Madaleno's proposal.

The bill levels the playing field between the state's businesses and online retailers, Saquella said.

"We've always needed it, and now it's needed more than ever, given these tight fiscal times," he said.

Madaleno's proposal is similar to a 2008 New York law, which was challenged in the state's Supreme Court by Amazon and Overstock.com.

The law eventually was upheld by Justice Eileen Bransten, who wrote in her opinion that it "obligates out-of-state sellers to shoulder their fair share of the tax collection burden when using New Yorkers to earn profit from other New Yorkers."

After the New York law took effect, Overstock canceled agreements with its 3,400 affiliates. An Amazon official has said that the company would cancel contracts with affiliates in Maryland if the state adopts the law.

Staff Writers Kevin James Shay and Douglas Tallman contributed to this report.