It seems to be a subject that never quite gets settled, but once again the prospect of an Internet sales tax is rearing its ugly head as states scramble to fix budgets that seem to be horribly broken.
The world economy is currently a mess, and when you get down to the state level int he United States, it is just disaster after disaster. States are scrambling to cut costs wherever they can, but at the same time they seem far more interested in raising taxes to fix the issues than anything else. While some states have tried tackling the Internet tax issue head on, the majority of these efforts have failed, so apparently it is time for the U.S. Congress to step in again.
According to CNET, Democratic Rep. Bill Delahunt of Massachusetts introduced a new bill last Thursday named the “Main Street Fairness Act”. This new bill, co-sponsored by other Democrat Representatives, would require state taxes to be collected on all Internet and mail order sales made no matter what presence a business has in each state. This could lead to up to $23 billion in new tax dollars being collected each year.
Under the current law, a company is only required to collect state taxes in states where it has a significant presence. In other words, any state where Amazon does not have an office, they do not need to collect taxes. While there is no tax collected at the time of sale, consumers are expected to report what items they purchased to their own state so that a “use tax” may be collected, but states report that few consumers comply with this.
This is the source of the current argument between North Carolina and Amazon where the state is demanding sales records from the retailer so that they can contact consumers about the taxes they owe, but Amazon is refusing to cooperate with the request.
The bill has yet to be fully revealed to the public, and thus far no Republicans have signed on to co-sponsor the bill, so it is hard to gauge how much support the proposal will actually garner.
While the bill is obviously aimed directly at large retailers such as Amazon, one has to wonder how this will impact small businesses that have flocked to the Web over the years as a means of tapping extra revenue streams. Small businesses are generally not set up to keep track of the tax rates of 50 different states, as well as filling out so many tax forms at the end of the year. While this bill could increase the coffers of state budgets, it could also have a very negative impact in lost jobs of those small businesses that find it too great of a burden to continue operations with so many more tax forms and records to keep track of.
As with anything in the United States Congress, it could be quite some time before we see this go before a vote, and who knows how many changes may happen before it even gets to the floor, but those glorious days of “tax free” Internet shopping may indeed be coming to an end.
What say you? Are you prepared to pay taxes on your Internet purchases?