A bill is getting ready to be introduced into Congress next week, that could spell the end of tax-free shopping on the Internet. With declining sales tax revenues and states clamouring for increased revenues, this could be the time that a bill may just pass. For about a decade this issue has been addressed but each time it has failed to gain support. But with the current economic climate it could pass this time around.
According to a CNet article it states that:
“One of the big things the states have learned in the recession is they have declining revenues,” said Scott Peterson, executive director of the Streamlined Sales Tax Project, which counts state politicians and tax collectors on its governing board. “We’re very optimistic about Congress this year. We think we are within a day or two of finalizing the legislation.”
The final legislation is expected to be introduced by Sen. Mike Enzi, a Wyoming Republican, and Rep. Bill Delahunt, a Massachusetts Democrat, who have championed similar proposals in the past. Delahunt’s office on Wednesday confirmed he was interested; Enzi’s did not respond.
On the other side are the Direct Marketing Association, the Electronic Retailing Association, and companies including eBay, L.L. Bean, and Overstock.com. One of their biggest objections to the idea of collecting sales taxes on out-of-state shipments is the dizzying complexity of state laws.
That last statement is the reason passing a tax bill for Internet purchases has always been complex. Since every state and every county or Parrish has their own tax rate[s], this issue becomes more complicated. But it gets better:
Under existing law, the caveat is that online purchases from sites like Amazon and eBay only seem to arrive tax-free. Legally, however, purchasers are required to pay their own state’s sales tax rate–the concept is called a “use tax”–and then voluntarily report the amount owed at tax time.
I am sure everyone one of us was aware of this and have reported the taxes we owned on our state returns. LOL
What do you think? Should purchases online be taxed?