COMMENTARY| Sales tax and the Internet have never really been the best of friends. Considering a Reuters report that revealed the 2011 sales figures for Cyber Monday were $1.25 billion, government agencies are looking to get a piece of the pie. However many companies do not collect sales tax or pay it to the appropriate states, because, as a report by Digital Trends points out, the current law is written to the point that online sellers do not have to collect sales tax unless the business has a physical presence in a state. If the law is changed, it needs to be simple enough to be followed for every single item sold online.
The odd part is two of the largest retailers on the Internet are on opposite sides of the Internet sales tax debate, according to CNNMoney. EBay believes stricter laws governing the collection of sales tax would hurt small merchants that use the virtual marketplace to sell their wares, and Amazon supports a simple national sales tax collection law for state and local governments.
The problem is that the bill being considered is anything but simple, or fair. A report by Digital Trends, indicates the Marketplace Fairness Act would require retailers of varying sales levels to collect sales tax. One idea requires any business selling more than $100,000 worth of merchandise in a specific state to collect and pay sales tax.
However, sales tax is generally paid by the buyer. As the eCommerce Blog points out, many buyers believe Internet purchases are tax-free, which is incorrect. Just because a seller does not charge sales tax, the buyer is still responsible for forwarding appropriate payment to the state, usually called a use tax. Retailers that do not charge tax can often have lower prices than large discount chain stores.
Of course, stores like Wal-Mart, Best Buy and Target have physical presences and charge appropriate tax on all the items sold on their websites, which puts them at a slight competitive disadvantage to sites that do not. However, singling out retailers just because they have $100,000, $500,000, or $1 million is sales is a bit exclusionary. Every retailer, even someone selling items on eBay, should be charging tax on the items requiring it, or every online retailer should be allowed tax-free status.
It should be that simple, either everyone has to pay or no one has to pay, but things are rarely simple in the world of politics.
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