Wednesday, April 22, 2009

Coming Soon: Sales Tax On Web Purchases?

If state legislatures get their way, a long-discussed online sales tax may soon come to fruition, much to the dismay of online retailers. A bill is expected to be introduced in Congress as early as Monday that would propose new tax rules for Internet and mail order sales, according to ZDNet.
Internet shoppers who buy from out-of-state companies aren’t always required to pay sales tax at the time of purchase, under current law. They are, however, required to pay their own state’s sales tax rate, known as a “use tax,” on such transactions when they file their state income taxes.

States legislatures are fully aware that consumers aren’t paying those taxes every April 15, according to BusinessWeek, which is why the National Conference of State Legislatures, among others, is pushing for the new law. Adding fuel to the fire, the Nelson A. Rockefeller Institute of Government just issued a report saying the 6.1% decline in 2008 state and local sales taxes was the greatest in the 50 years for which quarterly data is available, and that the opening months of 2009 indicate an overall decline of more than 12%.

Online retailers point to the complexity of state laws as a major hurdle if the new legislation is passed. Leading the counter-charge is the Streamlined Sales Tax Project, which is attempting to bring order to convoluted tax laws.

The National Retail Federation (NRF) supports the idea of an Internet sales tax. eBay, L.L. Bean, and, among others, don’t. I’m with the NRF on this one.

Not having to charge tax on their products, online retailers hold a significant advantage over brick-and-mortar retailers who must. Earlier efforts to pass an online sales tax failed because of the aforementioned state tax law complexities, something that can certainly be remedied if the state legislatures and federal government get their act together. Granted, that’s a very big if.

But the concept of Internet sales tax is more than fair. Online retailers shouldn’t be able to blame state legislatures for the free ride they’ve been getting at the expense of other retailers.


  1. The new law will bring easiness among people.
    Anyway thanks for sharing.

  2. Yes, and brick and mortar companies pay sales tax to a single authority because customers make purchases at a specific geographic location. The overhead required to file quarterly sales and use tax in 50 states is stupefying. The fools are pushing the law with no mechanism in place for online retailers to file sales and use tax to a single authority. If Congress can figure this out, then the idea makes sense. However, until this one issue is resolved, requiring the collection and payment of sales tax to the individual states will put many online retailers out of business. With the cost of fuel constantly rising, this also won't translate into increased traffic in brick and mortar.

  3. Okay, this may harm heart of some peoples and some will enjoy from it...
    Thanks for sharing...
    Tax online