Commentary

Going online with out-of-state sales taxes

MCT Information ServicesDecember 3, 2012 

The following editorial appeared in the Seattle Times on Friday:

While members of Congress negotiate to avoid sending the nation off the fiscal cliff, they should be sure to include a proposal to give states the authority to collect sales tax from online retailers not based in their state.

...Residents of states with sales taxes should pay their state’s sales tax whether transactions take place in a bricks-and-mortar store down the street or from a distant retailer on the Internet. Amending tax law to recognize the economic power of online retail is a good start.

Too often, consumers go to stores to pick out products yet avoid paying sales tax by purchasing the product from out of state on their smartphone. Underscoring the point are sales figures from Cyber Monday. The Monday after Thanksgiving tends to be the biggest online shopping day, offering a powerful economic indicator for Internet-based retail. Online sales among some of the largest U.S. retailers jumped 30 percent, compared with Cyber Monday 2011, according to data compiled by IBM’s Smarter Commerce arm, which surveys 500 online retailers.

Despite more than a decade of unsuccessful attempts to fix this problem, recent signs point to bipartisan congressional agreement on the issue. A subset of Congress bent on blocking anything that remotely resembles a tax increase should put their fears to rest. Collecting sales tax on Internet sales is not a new tax, but rather taxes that should have been paid all along.

Technically, people who purchase goods from out-of-state sellers that aren’t taxed owe a use tax. Few buyers pay it. But the practice is a hemorrhage of tax revenue owed the state. The taxes are owed. Time to ensure they are paid.

MCT Information Services

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