If the ongoing battle between online retail giant Amazon and individual states has taught us anything, it’s that there’s a lot of money to be made from e-sales taxes. And since we as customers aren’t so great when it comes to paying those on our own, states across the country are ramping up efforts to have those taxes levied by the retailers themselves.
The Washington Post reports that there’s been a wave of states passing laws that will require consumers to pay sales taxes on anything they buy on the Internet, as soon as next year. In Maryland, legislators even want to levy taxes on songs and other digital products bought online.
Consumers are already supposed to pay sales taxes on online purchases by reporting purchases on state tax returns, but many people just don’t. All those tax dollars could give a boost to states’ revenue, to the tune of $23 billion each year, according to the National Conference of State Legislatures. Hence why the action in state capitals is helping to make the push for a proposed bill in Congress that could make collection of sales tax a standard practice on the Web, no matter where you’re shopping.
Amazon had been fighting against state taxes, using a 1992 Supreme Court ruling that said online companies didn’t have to charge sales tax if they didn’t have a physical presence in the state where a customer lived. They gave up that battle recently, agreeing to charge sales taxes in states like New Jersey and Texas, while finding ways to still profit from states like California in the process.
Online shopping isn’t going to go away any time soon — e-commerce generated $200 billion in revenue last year, and is up 15% in the first quarter of 2012 over 2011.
Amazon is also onboard with the latest federal proposal, the Marketplace Fairness Act, a bipartisan effort that appears to be moving forward. The bill proposes that a state can decide whether or not to enforce collection of its sales tax. If it does, then it must simplify its tax system according to conditions outlined in the bill. The bill exempts online businesses that make less than $500,000 a year from collecting sales tax, however.
States, Congress rallying for an e-sales tax [Washington Post]