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Return on internet sales tax

the 1998 Internet Tax Freedom Act forbids such internet sales taxes ? No.

On the other side are the big Internet retailers, such as Amazon.com and eBay, which have fought hard to maintain a status quo that gives them a marked advantage over local brick-and-mortar merchants. Amazon.com, the largest and best-known Web retailer, has fought efforts to collect sales tax from customers. The company argues that the crazy quilt of taxing jurisdictions -- there are approximately 8,500 in the United States -- makes doing so impractical.

Nonsense -- an industry that can deliver tailored ads to buyers in a fraction of a second could surely solve whatever technical problems exist. And it already has: Reed Hastings, the chief executive of Netflix, told the New York Times, "We collect and provide to each of the states the correct sales tax. There are vendors that specialize in this (we use Vertex). It's not very hard." Plus,

The Tax Freedom Act isn't an obstacle
Although many people believe that the Internet Tax Freedom Act stands in the way of collecting sales taxes on Web-purchased items, it doesn't. The major thrust of the law is to forbid states from imposing a sales tax on Internet connection fees. It also stops states from imposing a sales tax on items sold via the Internet that aren't taxed in brick-and-mortar stores, an unlikely form of discrimination. And it forbids collecting higher taxes for e-commerce purchases than for brick-and-mortar and mail-order purchases.

What does stop states from collecting sales taxes on e-commerce goods is a 1992 ruling by the U.S. Supreme Court that the states could not order retailers that don't have a physical presence in the state to collect sales tax. Back in 1992, that really meant mail-order catalog merchants, but by extension, it applies to Web retailers as well. However, there's nothing in the decision (Quill v. North Dakota) that forbids states from ordering buyers to pay the sales tax, says Michael Mazerov, a senior fellow at the nonpartisan Center on Budget and Policy Priorities in Washington, D.C., who has written extensively about the sales tax issue.

And it doesn't stop states from taxing a company like Amazon.com that has a brick-and-mortar affiliate within their borders. Amazon.com affiliates aren't those third-party sellers on its website; they are typically companies that have an Amazon.com ad on their own website. When a consumer clicks on the ad and goes to Amazon.com to make a purchase, the affiliate gets a cut of the revenue.

Is the free ride fair?

via Why it's time to tax Internet sales," was originally published by InfoWorld.com. Read more of Bill Snyder's Tech's Bottom Line.


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