U.S. states could collect millions of dollars in online sales taxes, with members of both parties in Congress sponsoring legislation that would resolve states' decades-long struggle to tax businesses beyond their borders.
The proposed legislation permits States to enforce the Collection of Sales & Use Taxes from Internet Retailers, placing them on a par with brick and mortar businesses.
This Act permits States to require qualifying Sellers to collect and remit sales and use taxes on remote sales, but the States must implement certain simplification requirements.
The bills introduced in the House and Senate are
substantially similar in all material respects. Each provides an important
exception, the "Small Seller Exception", for businesses with less
than $1 million dollars in annual domestic remote sales.
Since 1992 when the Quill case was decided by the
Supreme Court, States have been prohibited from collecting sales taxes on
purchases made by in-state customers from out-of-state sellers who lack
sufficient physical presence. Simplification is required because the Supreme
Court ruling cited a concern that
collecting sales tax for multiple states would be too difficult.
The Marketplace Fairness Act requires that states
must simplify their sales tax laws
in order to ease those concerns and make multistate sales tax collection easy.
In the last decade, Internet sales have gone from 1.6 percent of all U.S. retail sales to more than 5 percent, according to Commerce Department data, a proportion that will likely grow as shoppers turn more to handheld devices to make purchases. In the third quarter of 2012, retail "e-commerce" sales were $57 billion, the department said.
Large Internet retailers are worried the tax could drive up the cost of doing business. They would also have to create new systems and software to collect the surcharges, adding to their costs.
Amazon said in July it prefers having the tax issue resolved at the federal
level. States and cities say they can recoup billions of dollars with the tax.
Some estimate around $11 billion in tax revenues are currently being lost, due
to exempt internet sales.In the last decade, Internet sales have gone from 1.6 percent of all U.S. retail sales to more than 5 percent, according to Commerce Department data, a proportion that will likely grow as shoppers turn more to handheld devices to make purchases. In the third quarter of 2012, retail "e-commerce" sales were $57 billion, the department said.
Large Internet retailers are worried the tax could drive up the cost of doing business. They would also have to create new systems and software to collect the surcharges, adding to their costs. Amazon said in July it prefers having the tax issue resolved at the federal level.
States and local jurisdictions will clearly
benefit from significantly increased tax revenue, but internet purchasers will
find their bargain purchases much reduced in value and businesses will find
their compliance costs increased.
Have
State & Local Tax Issues?
Contact the Tax
Lawyers at Marini& Associates, P.A.
Sources:
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