June 5, 2005

Majority of states want to tax Internet sales

9News reports from Denver that 43 U.S. states have joined together in a coalition to collect sales tax on all Internet purchases. The article does not mention whether the states are addressing some of the main issues — that states have different tax rates, nor whether companies would pay tax in their own states or in every state.

The article mentions “new software [that] will make collecting the money almost automatic and that they can have a system in place by Oct 1″ but it’s not the law yet:

The proposal is for the new system to initially be voluntary. “So (unless) Congress were to act and make this mandatory, there would be no penalties,” says Peterson. But there’s a plus for businesses who do adopt the software. The states say the electronic system is so good, they’ll designate participating businesses “audit proof.”

Well :cough: yes.

7 Comments to "Majority of states want to tax Internet sales"

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  2. DianeV says:

    Hi, Aaron. Yes, of course they want Internet sales tax. I’m assuming that at some point it will happen, but they’ve got to make it easier to pay tax in various jurisdictions.

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  4. Marc Grobman says:

    Hi DianeV

    I’ve been following your blog for a while — thanks for the info.

    I think this is a no-brainer. People should pay tax wherever their business is located. Though I support online business, it is crazy to think internet businesses should not share infrastructure costs.

    Marc

  5. DianeV says:

    Good to meet you.

    I’m all for being fair. I’m guessing that an Internet sales tax is all but inevitable. Given that we all already pay both federal and state income tax, if an Internet sales tax were to be levied, I’d hope that it conforms to the parameters of sales tax for offline ventures.

    I’d also hope that collecting and paying such a tax does not impose too great a burden on companies. For instance, taxes are different in different parts of California alone, and keeping track could be at best burdensome. Location is probably the easiest idea.

    Again, good to meet you.

  6. DianeV says:

    See Are Your Internet Sales Taxable? from the California State Board of Equalization (Publication #109 — a PDF file).

    It appears that the State of California is not distinguishing between offline and online sales, except in cases where both sales and delivery take place online only.

  7. Marc Grobman says:

    Good to meet you too!

    I agree that any solution needs to be fair and easy — many internet business are mom and pop businesses run out of people’s homes. There are also many who feel that the internet is somehow so special it should be immune to the taxes that we all pay. And many of these complainers are just large companies who, I think, are being greedy and avoiding their contributions to our rich society.

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