This article suggests that tax-free internet sales may soon be over. Accountants know that there is no such thing as tax free sales in most states because almost every state has a "use" tax. The reality is that most people do not pay the "use" tax on many purchases.
That may be changing soon as internet sales grow and states are losing out on tax revenues.
Is this fair?
That may be changing soon as internet sales grow and states are losing out on tax revenues.
Is this fair?
Tax-free Internet Shopping May Soon Be Over
April 18, 2007
WASHINGTON – Shopping on the Internet without paying sales tax may be ending soon, if an alliance of politicians, including key U.S. senators, and the National Governors Association have their way, News.com reports. The alliance is pushing for out-of-state retailers to charge sales taxes on purchases. Right now, for example, companies like Seattle-based Amazon.com do not have to collect sales tax on shipments to California customers.
While officials from the governor’s association have been trying to get Congress to pass such a law for the past several years, the Democrats in control of Congress might be more likely to agree.
“When you have a Democratic majority in Congress, that Congress will be more friendly to imposing new burdens on business if it means additional tax collection,” Steve DelBianco, executive director of the NetChoice coalition, with such members as eBay, Yahoo and the Electronic Retailing Association and opposes the sales tax plan, told News.com.
In addition, in 2002, state tax officials invented the Streamlined Sales Tax Agreement, which straightens out some of the more convoluted state tax laws. “Without any doubt, Congress will eventually approve legislation to give states that comply with the (agreement) mandatory collection authority for out-of-state transactions,” said Neal Osten, federal affairs counsel for the National Conference of State Legislatures. “We expect that the legislation will be introduced shortly in this Congress.”
Thus far, 22 states have enacted legislation to simplify their tax codes in support of the agreement, Osten said. “We believe that with the system operational, with software and online collection available, sellers volunteering and revenues being collected, Congress will consider the legislation and indeed approve it.”
Because each state classifies items requiring sales tax differently, the U.S. Supreme Court ruled in a 1992 case that out-of-state retailers generally shouldn’t have to collect sales tax unless Congress changes the law. One exception is cigarette sales sold online are subject to sales tax, according to the Jenkins Act, which was passed in 1949.
April 18, 2007
WASHINGTON – Shopping on the Internet without paying sales tax may be ending soon, if an alliance of politicians, including key U.S. senators, and the National Governors Association have their way, News.com reports. The alliance is pushing for out-of-state retailers to charge sales taxes on purchases. Right now, for example, companies like Seattle-based Amazon.com do not have to collect sales tax on shipments to California customers.
While officials from the governor’s association have been trying to get Congress to pass such a law for the past several years, the Democrats in control of Congress might be more likely to agree.
“When you have a Democratic majority in Congress, that Congress will be more friendly to imposing new burdens on business if it means additional tax collection,” Steve DelBianco, executive director of the NetChoice coalition, with such members as eBay, Yahoo and the Electronic Retailing Association and opposes the sales tax plan, told News.com.
In addition, in 2002, state tax officials invented the Streamlined Sales Tax Agreement, which straightens out some of the more convoluted state tax laws. “Without any doubt, Congress will eventually approve legislation to give states that comply with the (agreement) mandatory collection authority for out-of-state transactions,” said Neal Osten, federal affairs counsel for the National Conference of State Legislatures. “We expect that the legislation will be introduced shortly in this Congress.”
Thus far, 22 states have enacted legislation to simplify their tax codes in support of the agreement, Osten said. “We believe that with the system operational, with software and online collection available, sellers volunteering and revenues being collected, Congress will consider the legislation and indeed approve it.”
Because each state classifies items requiring sales tax differently, the U.S. Supreme Court ruled in a 1992 case that out-of-state retailers generally shouldn’t have to collect sales tax unless Congress changes the law. One exception is cigarette sales sold online are subject to sales tax, according to the Jenkins Act, which was passed in 1949.
