Tags: online | sales | tax | revenue

States Move to Fill Depleted Coffers With Online Sales Taxes

Monday, 09 Jul 2012 12:14 PM

A number of states have passed laws that will require consumers to pay sales tax on all Internet purchases as soon as next year. The taxes could bring in some $23 billion each year to states still suffering with reduced income as a result of the poor economy, The Washington Post reported.

The states include Virginia and Maryland and had the sales tax been in effect this year, Virginia would have collected an additional $423 million and Maryland some $376 million. In Maryland, Gov. Martin O’Malley wants to apply to expand the tax to such purchases as music, the Post reported.

Online shopping amounted to $200 billion in the last year and sales continue to grow. Congress is considering a measure to make the collection of sales tax a standard practice. The move is supported by old-line retailers who believe online rivals have an unfair advantage as a result of a 1992 Supreme Court ruling that exempted online companies from state sales taxes if they if they didn’t have a physical presence in the state where the customer lived, according to the Post.

Online prices are so low that retailers have found that customers will visit a store, examine products, and then purchase online in a practice they refer to as “showrooming.”

“You’ve been doing all of the work and then the online competitor steals the sale,” David French, senior vice president of government relations at the National Retail Federation, told the Post.

California and Texas recently pressed Amazon to collect sales and the company will begin charging sales taxes for customers in eight states over the next four years, the Post reported.


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