Coming Soon: Web Taxes?


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NEW YORK ? In a controversial decision that may leave Web-based and mail-order retailers in a tizzy, 31 states this week decided to simplify their sales tax structures so that Internet and Main Street retailers would be on the same page when it comes to collecting sales taxes.

The plan is, in part, a move to get the OK from Congress to have a nationwide mandatory online sales tax collection system. Traditional, brick-and-mortar retailers have demanded such a move since the catalog-sales business took off in the 1980s, followed by the Internet retailing boom in the late 1990s.

"Basically it's to treat the transaction or the sale of items the same way no matter how they buy it for purposes of sales tax ? so that what something means in one state means the same in another state," whether it be online or in a store, said Neal Osten of the National Conference of State Legislatures, which has been leading states' efforts.

At present, only mail-order or Web customers who live in states in which vendors have a physical presence have to pay sales tax. In other words, Washington state residents, but few others, pay that extra bit for books bought on Washington-based Amazon.com, and only Maine dwellers do so for L.L. Bean hunting boots.

Not only do states have different collection rates and rules, but more than 7,000 local jurisdictions do as well. Meanwhile, the entire states of New Hampshire, Delaware, Montana, Oregon and Alaska don't have any sales taxes at all.

"The states' sales tax systems are nearly as complicated as the IRS tax code," said Maureen Riehl, a vice president at the National Retail Federation, a trade group that represents nearly 1.4 million stores that supports tax simplification. "This is a nightmare for retailers doing business in multiple states and for consumers who travel from state to state."

Internet and mail-order businesses of all sizes aren't likely to warm to the idea that even if they only have a physical presence in a few states but serve customers throughout the country, they still have to pay the price of collecting sales taxes.

This may harm small businesses, which may have a harder time paying for the technology needed to calculate the taxes.

Source: FOX News

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