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Internet Sales Tax Back in the Mix

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We’ve all heard this argument before – that retailers need to pay local sales taxes for online purchases … and it’s about to be thrown back in the political arena. Democratic Senator, Dick Durbin, is set to launch a proposal next week mandating that online retailers collect a local sales tax for all transactions – regardless of where the business resides. This Main Street Fairness Act would impact everyone from Amazon and iTunes to smaller independent websites. So if you’re a blogger selling your ebook, or t-shirts, or any other product – you should probably take note!

Local Sales Taxes Durbin has been pushing for the proposal since February. In a speech in Chicago, Durbin complained that online businesses should be subject to the same taxes local brick-and-mortar stores pay. He said, “Why should out-of-state companies that sell their products online have an unfair advantage over Main Street bricks-and-mortar businesses? Out-of-state companies that aren’t paying their fair share of taxes are sticking Illinois residents and businesses with the tab.

The entire tax system is very convoluted, and many small retailers don’t even know they are currently required to pay sales tax for online purchases. The “Use Tax” requires they pay their own state’s sales tax rate – even when shipping to another state.

According to this informative article on CNET: Paul Misener, vice president of public policy for Amazon, says his employer isn’t necessarily opposed to such legislation–as long as it’s crafted very carefully. “We’ve long supported a truly simple, nationwide sales tax system, evenhandedly applied.

I have to agree. I’ve researched databases of local sales tax rates, and they are in depth, expensive, and constantly changing. I can only imagine the amount of small businesses that would drop their onlinestores if they had to purchase this database and implement the system for automated tax calculation. A simple nationwide plan is a must.

What do you think?

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