States Ask E-tailers to Pay Sales Tax

Discussion
Sep 01, 2005
George Anderson

By George Anderson

“This fall,” reports The Associated Press, “13 states will start encouraging — though not demanding — that online businesses collect sales taxes just as Main Street stores are required to do.”

The decision by the states came out of an initiative known as the Streamlined Sales Tax Project, developed by state government officials and business leaders to come up with a unified set of definitions and tax rules for Internet sales.

To be included in the project, new states need to change tax laws to comply with those in place at the original 13. Those are Indiana, Iowa, Kansas, Kentucky, Michigan, Minnesota, Nebraska, New Jersey, North Carolina, North Dakota, Oklahoma, South Dakota and West Virginia.

Arkansas, Ohio, Tennessee, Utah and Wyoming are expected to join the effort.

Companies are being encouraged to participate, the AP explains, by states taking a carrot and stick approach. “If businesses register and start collecting taxes this year,
they’re given a yearlong amnesty from the possibility that states may seek back taxes for online purchases.”


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6 Comments on "States Ask E-tailers to Pay Sales Tax"


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Karen Kingsley
Guest
Karen Kingsley
15 years 6 months ago

Like everyone who spends much of their lives in front of a computer, I, personally, do a lot of shopping online, and thoroughly enjoy the competitive pricing and absence of sales tax.

Sales tax must inevitably hit the Internet. There is simply too much revenue to be had. Since e-tailers usually charge for shipping, the absence of sales tax has most often offset that additional charge. I believe e-tailers will respond by watching their pricing, continuing to offer free shipping on large purchases, and offering other value-added, such as comparison shopping, and expanded information on products and services.

Price pressure affects everyone and e-tailers have been given a bye on taxes so far. In some ways this will level the playing field with bricks and mortar retailers, in others, it will simply increase the cost of doing business to consumers. I, personally, will miss the free ride.

J. Peter Deeb
Guest
15 years 6 months ago

I also shop on the Internet and like to avoid taxes. However, the growth of Internet sales makes taxing those purchases inevitable. Companies locating to tax free states simply make those in taxed states more competitive. States have budgets built on tax collection and if retail sales fall due to Internet sales those taxes will be made up somewhere! There is no such thing as a free lunch!

Mark Lilien
Guest
15 years 6 months ago

Internet customers love to save sales tax, especially for high-ticket purchases. Rugsusa.com, located in NY, already says they’ll absorb the tax for NY customers. I believe that 5 states have no sales tax: Alaska; Delaware; Montana; NH; Oregon. I assume that some Internet firms will relocate to those states. Firms that charge no tax will have a tremendous advantage.

Jeff Weitzman
Guest
Jeff Weitzman
15 years 6 months ago

There will be an impact, especially on retailers that are shaving margins to nothing to offset lack of buying power and efficiency. The bigger and better online retailers will be fine. Many of them charge sales tax in their home states now and I suspect they don’t find a significant drop-off. The pressure on shipping prices and policies will favor the larger stores that can get the best pricing from couriers.

Warren Thayer
Guest
15 years 6 months ago

I’d expect little impact, since shoppers are generally reaping the higher priorities of convenience, variety and generally low prices to begin with. I also expect little impact in terms of “voluntary contributions.” Nice idea, but would you collect the tax and go thru the paperwork if it wasn’t required? I think not!

Mark Burr
Guest
15 years 6 months ago

Surprised by the responses, but as I see it, the sales and purchases on the Internet will be impacted neither positively or negatively by sales taxes being collected. I personally don’t believe consumers give the sales tax portion of the purchase a second thought. As with shipping and handling, they simply consider it as part of the deal. Those claiming it as a factor are in a vast minority.

Tax due should be collected and the sooner states gather themselves and achieve compromise on a simplistic method, the better for the consumer and the government combined.

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