The beauty of purchasing products over the Internet has always been no sales tax. These savings have made Internet purchases a way of life for some. Throw in free shipping and you have some of the best deals around. Tax free buying is slowly becoming a way of the past, as states like Colorado pass laws to enforce sales tax collection.
Short falls in state budgets have many states like Colorado focusing on Internet sales. The National Council of State Legislatures, is lobbying Congress to pass a law helping states collect Internet sales tax.
California has already prepared legislation, along with New York, Iowa, New Mexico, Vermont and Virginia. Sixteen other states are considering taxing Internet sales or enforcing laws that are already on the books.
In most states, sales tax is collected only when a retailer has a physical presence in that state which a sale is made. A customer pays the sales tax to the retailer and the store pays the money to the state. In the case of Colorado, they want retailers like Amazon.com to pay the tax even if Amazon doesn’t have a presence in the State of Colorado.
According to Amazon.com, this law is unconstitutional since the 1992 Supreme Court ruling found “states can only make companies collect sales tax if they have a physical presence in the state”. In protest of Colorado’s law, Amazon has blocked 4000 affiliates, with websites in Colorado, from selling Amazon products.
Brick and Mortar businesses like J C Penny and Zales have seen a 12% drop in sales since 2009. This has resulted in less tax revenue for the states. To make up for the loss, many more states will focus on Internet tax enforcement in the future.
Author: Cityclix.net Staff Writer
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