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Tax on Internet Sales


Naturally, there is a great deal of opposition to this tax moratorium from state governments and brick-and-mortar retailers. A look at the numbers explains why. Sales tax revenues currently amount to about $150 billion annually and make up approximately one-third of all state revenues. These taxes pay for everything from schools and police to roads, parks, and other state services. California, alone, estimated losses of over a billion dollars per year.

States that don't have a personal income tax, like Texas, are even more dependent on sales tax revenue. (The five states that don't have a sales tax -- Alaska, Delaware, Montana, New Hampshire, and Oregon -- aren't hurt at all).

In 2002, state governments organized to fight back. Under a state-led initiative known as the Streamlined Sales & Use Tax Agreement (SSUTA), 40 states and the District of Columbia banded together to simplify their sales tax codes in order to make sales tax collection easier. Under SSUTA, the collection of sales tax still remains voluntary. However, if ten states representing 20% of the U.S. population vote for the rules, the organization will pressure Washington D.C. for federal legislation. The SSUTA has gained traction recently. Several national retailers have negotiated with member states for amnesty deals in return for future collection of sales tax, and more are expected to follow. The SSUTA expects to implement a multistate arrangement effective October 1, 2005, and a number of states are preparing certificates of compliance with the SSUTA. In addition, several states have already amended their tax laws to conform to the SSUTA. With all of this pressure from states, many expert believe that within the next few years you'll be throwing a few more dollars into your shopping cart for state sales taxes.

 
More Information About Internet Sales Tax
  • E-fairness (www.e-fairness.org) represents retailer organizations lobbying Congress for equal taxation.
  • The Sales Tax Institute (www.salestaxinstitute.com) provides a range of services and links associated with sales tax.
  • E-Commerce Tax News (www.ecommercetax.com) provides news and feature articles about e-commerce taxation, including email updates from an e-commerce expert.
Copyright 2007 Nolo

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