Hot news: Sales taxes are going to be collected on purchases made over the Internet. It will take a new federal law and a clearinghouse arrangement to handle distribution of the revenue, but its going to happen. Thats not a prediction, thats a promise. And it will happen within five years, too.
I am not sure why people oppose this. Not collecting these taxes saves people a few bucks, but its at the expense of community services and disadvantages local merchants.
Sure, I like buying stuff “tax-free” over the Internet, but I like my local police and schools more.
I also like my local merchants, who hire local folks, some of whom are getting hammered by customers who shop locally and then buy over the Internet and out-of-state.
Frankly, the only reason I can imagine for not already collecting sales tax on Internet purchases is a pesky Supreme Court ruling that linked tax collection to physical location.
With the Internet and rapid shipping of goods purchased there, location isnt what it used to be. I can order something from out-of-state and have it in a day or two, without having to conduct a physical search for the item in local stores.
OK, theres the other reason: We need a mechanism that makes it easy to collect sales tax and send it to the 50 states without the merchant having to file for 50 state tax permits, write 50 checks, file 50 reports, etc.
I see no reason why accounting software couldnt create an electronic transaction report that could be attached to an electronic payment and sent to a clearing house. There, the file would be read and the taxes properly divided, down to the local level.
As for collecting the proper tax, downloading tax tables is not a very big deal. You might occasionally have to ask a shopper what county they live in, or something similar, but I cant imagine this would be a huge undertaking.
What might slow it down, however, is the need for some new tax regulations in the states after Congress gives its OK.
Chris Nolans readers notwithstanding, I really dont understand how anyone could oppose this.
Well, anyone who doesnt think that all taxes are bad. To those people, any kink in the taxing system that lets money slide seems like a good thing.
Fairness is an important issue here. Why should brick-and-mortar vendors, who contribute far more to their communities than just tax revenue, be discriminated again?
I think a fair case could be made that Internet vendors should pay more taxes than those selling from retail storefronts. I am not suggesting that, but I think the argument could be made.
It is very important to make these payments as transparent to merchants as possible. Small businesses could easily be overwhelmed by the paperwork, so a single payment system, coupled with updates to accounting software is an absolute must.
But, beyond the need for a technological solution, I can see no reason why someone interested in tax fairness wouldnt support collecting sales tax on all Internet transactions.
Sales taxes are bread-and-butter revenue for local government. They are what helps pay for the community services we use every day.
If the federal government feels for some reason that Internet businesses need a break, they should implement it through the IRS code, though I see no need. Internet businesses never were on life-support.
Congress should, as soon as possible, enact legislation allowing states to collect sales tax on Internet purchases across state lines.
The law should include enough time for the technology to come together, but after that every Internet transaction should include sales tax.
Local governments and brick-and-mortar business deserve a break, too.
Contributing editor David Coursey has spent two decades writing about hardware, software and communications for business customers. He can be reached at [email protected]