It’s hardly surprising that the U.S. Senate approved legislation Monday to force Internet retailers to collect sales taxes for state and local governments. What is surprising is that it took this long for Washington to act.
Federal, state and local governments never seem to shy away from taxing whatever they can. So it is a wonder that Internet sales have escaped the tax man this long.
But the Internet sales tax is far from a done-deal. Opponents of the tax vow to take fight the measure in the House, hoping that lawmakers will agree with their contention that the complexity of collecting the taxes will put many Internet retailers out of business or subject them to a flurry of audits from state and local governments around the country.
The legislation would allow states to force online retailers with more than $1 million in annual out-of-state sales to collect sales taxes from all customers and remit those taxes back to state and local governments. States would have to provide software to help calculate the taxes for thousands of jurisdictions.
There is no argument that allowing Internet sales to go untaxed puts tradtional brick-and-mortar businesses who do have to collect sales taxes at a disadvantage.
“The first thing we have to make sure everybody understands is this isn’t a tax issue,” said Matthew Shay, chief executive of the National Retail Federation, which pushed for the legislation. “States determine the level of sales taxes to be collected. All we want to do is make sure the taxes are collected that are due.”
But the trick will be crafting legislation that will be fair and effective — and at the same time not so onerous that it will put Internet marketers out of business.
The House has its work cut out for it if it is to emerge with a bill that addresses all of those needs.