A new act currently under debate in Congress could mean that soon most people will pay sales taxes on their online purchases.
In the near future, you could be paying a lot more for the things you purchase online. A new sales tax bill called the Marketplace Fairness Act could allow 45 states and the District of Columbia to require online retailers to collect sales taxes on purchases, and those tax revenues could number in billions of dollars according to analysts. In fact, some estimates indicate that the new sales tax would generate about $23 billion more a year in increased tax collection[1]. Presently, states can only demand sales tax from online retailers if that retailer has a physical presence ? like a warehouse or a factory ? in the state and then only if the buyers are also located in the state. Although some states have tried to enforce the state sales tax on all buyers, only about one percent of buyers actually comply with this type of law. However, the proposed legislation would require any seller with more than $1 million a year in sales would be responsible for collecting the online sales tax and paying it to various states.
Not surprisingly, most online retailers object to the proposed tax legislation, with Amazon being one of the few exceptions. Most Amazon customers already pay sales taxes on purchases from that site because the company has warehouses in most states, so Amazon views this as a way to level the competitive field by requiring retailers with ?a smaller geographic footprint? to also deal with the sales tax. eBay, on the other hand, is adamantly opposed to the bill and has asked its millions of users to contact Congress and oppose the legislation, which will likely hurt many eBay users who run small internet businesses via the auction site.
Last week, the Senate voted to take up the legislation for ?debate and amendment? in hopes of getting the bill passed and enabling ?states and localities [to start collecting] a lot of money,? as senator Richard Durbin (D-IL), described it. National Retail Foundation (NRF) spokesman Stephen Schatz also felt optimistic, saying that the passage of such a tax is ?inevitable with states looking for revenue, with the growth of e-commerce?[2]. The president is also supporting the bill, although the White House is describing the advantages to such a bill directly opposite to the manner in which Amazon describes them. President Obama says that the new taxes will ?level the playing field for local small business retailers that are in competition every day with large out-of-state online companies.? The House of Representatives has yet to decide if it will allow a nearly-identical bill to the floor for debate and amendment this week.
Do you think that internet sales tax should be universal? Should small online retailers be exempt?
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[1] http://money.cnn.com/2013/04/22/pf/taxes/internet-sales-tax/index.html?iid=SF_PF_River
[2] http://www.nytimes.com/2013/04/23/technology/internet-sales-tax-gains-ground-in-senate.html?_r=0
Category: Business News
Source: http://investing.bryanellis.com/6662/business-notes-decision-on-internet-sales-tax-looms/
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