Tuesday, May 7, 2013

Internet Sales Tax Moving Forward

Main Street has been fighting the web for years over the discrepancy in state sales tax collection.  And online consumers have benefited from this "discount", using brick and mortar stores to check items and then purchase online without paying an additional tax on the purchase.  But that advantage seems destined to end.  "The Marketplace Fairness Act — which will force online merchants to collect tax on behalf of other states — passed the Senate on Monday."

While Amazon has been building out distribution centers and managing state agreements to gain incentives to build in exchange for a tax-free status, other online retailers like the simplicity in neither collecting or reporting state sales tax across all 50 states.  And while it may cause new accounting issues, it will certainly help states (those with sales tax) add revenue back into their budgets.  

Certainly, the bill still has a long way to go to pass the House and some changes to it could occur.  "eBay, one of the law’s prime opponents, said in a statement that it will keep pushing for merchants who collect less than $10 million to be exempt."  But it seems an inevitability that such a law will eventually pass now that the size of internet sales is no longer a niche business.