Consumers should be prepared to start seeing sales tax collected on more and more of their online purchases as cash-strapped states look for additional sources of revenue, says tax industry research group CCH, a Walter Kluwers business.
Although the industry analysis does not predict that sales tax collection will have a big impact on this holiday shopping season, CCH reports that sales tax for online purchases is becoming the trend with or without a legislative push. In recent months, both Democrats and Republicans have sponsored Federal legislation to compel online retailers to collect sales tax. Under current Federal law, states cannot force sales tax collection on online retailers that do not have a physical presence in their state.
Several states have already moved forward with their own legislation, however, compelling online retailers, such as Amazon.com, to collect sales tax. So called "Amazon laws" require e-commerce companies with a presence in that state to collect sales tax from their customers.
Whether legislatively compelled at the Federal or state level or through online retailers seeing it as inevitable, the trend is moving toward more online retailers collecting sales and use taxes,said Daniel Schibley, CCH senior state tax analyst.
Overall, 45 states currently have a sales tax and 16 states have enacted or have legislation proposed to require online retailers to collect sales and use tax, according to CCH.
Amazon founder and CEO Jeff Bezos stated in May of this year that federal legislation is required to address differing state policies on the collection of sales taxes from e-commerce companies, but that until such a time his company would fight state efforts to enact such sales tax laws. Then in June, California passed a bill to tax online retailers, which Amazon then fought by dropping its California affiliates and turning to voters to nix the law. The state subsequently let Amazon delay collection of sales tax for one year. That year is up September 2012.
Several other states, such as Arkansas, Connecticut Illinois, and Tennessee have also done battle with Amazon over the issue of sales tax.
CCH Says Internet Taxes Becoming the Trend With or Without Legislative Push [CCHGroup]
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