Internet Sales Tax?

Wednesday, July 25, 2012 - 7:44am

House considers bill that could result in sales taxes on online purchases.

Congress appears close to finally figuring out a way to help states collect sales tax from online retailers.

Legislation to do just that is seemingly on a fast track because states say they desperately need the revenue.

From the moment online retailing took off in the mid-1990s states have complained about uncollected sales taxes.

"The current estimate of sales tax that goes uncollected each year in the U.S. is more than $20 billion!" Tennessee Governor Bill Haslam told House Representatives Tuesday.

That's tax money that the states say they desperately need right now with revenue from everything else dropping.

Brick and mortar retailers are complaining as well, and say it's an unfair advantage for online retailers who are already on top.

It's why Congress seems as close as ever to passing the Martetplace Equity Act, which will require online merchants to collect and send to each state the sales tax on each transaction.

"In short, this bill levels the playing field in the world of retail sales," says Arkansas Congressman Steve Womack.

Only Congress can force collection of state taxes on internet sales, and the legislation has support from both sides of the aisle, even from anti-tax Republicans like Tennessee's Governor Haslam.

"This discussion isn't about raising taxes or adding new taxes. This discussion is about states having the flexibility and authority to collect taxes," he says.

Online retail giant Amazon anticipated all this and has started collecting sales taxes for several states, while other internet businesses say figuring out the tax rates of the nearly 10,000 states, cities and towns will be more than tough.

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