On The Hill

New Online Sales Tax Being Debated In Senate

Congress will soon decide on an online sales tax.
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At some point or another, you have purchased something online.  Last year, Americans spent $226 billion over the internet.  There is a lot of appeal; large selection, the convenience of shopping from home, and, in many cases, not paying an online sales tax.

In these times of financial hardship, with government looking to add revenue without overburdening people, lawmakers are looking to change the rules in regards to taxes on online sales.  As the law stands, businesses can only collect sales tax from buyers in states where they have a physical location.  Seeing potential for much-needed funds to the states, Congress has proposed the Marketplace Fairness Act.

Sponsored by Republican Sen. Mike Enzi, the bill basically would require businesses that generate over $1 million dollars to pay sales taxes on online sales to the state where the purchaser lives.  For example, if a business in Iowa is shipping an internet purchase to a customer in Pennsylvania, the seller would have to pay the Pennsylvania sales tax.

Online Sales Tax

The bill has bipartisan support, as well as support from large online retailers such as Amazon.  Supporters say that adding an online sales tax would help current financial hardships without burdening taxpayers.

On the other hand, the bill also does have those opposing it, stating that it would add confusion and responsibility to online businesses that physical businesses do not have.  Online sellers would have to keep track of what taxes would need to go to what state, as well as keeping in mind that five states – Deleware, Montana, Alaska, New Hampshire, and Oregon – do not charge a state tax, although Alaska and Montana do allow for localities to set their own sales tax.

The idea of an online sales tax is something that government officials have wanted to put in to place for several years.  And in many ways it would make sense; the internet is a large resource that is very much untapped in that regard.  Now, there is a chance that it could become a reality.

[Image via Annette Shaff / Shutterstock.com]

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