Is Tax-Free Internet Shopping Soon To Be A Thing Of The Past?

America wants YOU!… to pay tax on that Body Snake you bought online last week.

Sales taxes, one of the largest source of state tax revenue, dropped 6.1% nationwide since last year. That’s the biggest drop in 50 years. And how does the government plan to make up this shortfall? Why, by taxing internet shoppers, of course! (Although, in theory, you’re supposed to be paying a “Use Tax” already…)

A bill to be introduced in Congress this week would close the loophole that allows you to avoid paying sales tax when buying online from an out-of-state vendor. The proposal has been kicked back again and again over the past seven years, but it has gained momentum now that most local governments are hurting for cash. And we’re talking major cash — losses of about $10 billion a year nationwide due to uncollected sales taxes from Internet and mail order purchases.

But the main reason taxes aren’t paid online is that each state has its own convoluted set of tax rules and regulations, and there is no sane way to organize them. Enter the Streamlined Sales Tax Project, a group of tax-loving officials who are devising a uniform tax code to ease collection online. So very sweet of them.

For a fascinating look at your government at work, check out the SSTP website. Sample: Breath mints are food, toothpaste is not. Pumpkins are food, even though “the purchaser may use them for a purpose other than for ingestion or chewing.” And: “When is an item sold heated? When it is offered for sale heated. Not sold heated if sold from a refrigerated display case.”

Tax-Free Internet Shopping May Be Almost Over [CBS News]

Photo:Kevin Zollman