Friday, November 25, 2011

Federal Internet Sales Tax Law Coming Soon?

The Washington Times reports that the era of sales-tax-free shopping on the Internet for residents of relatively high sales tax states like California may be coming to a close, as brick-and-mortar retailers pressure Congress to close the "loophole":
[Federal Internet sales tax] bills have come and gone for years [in the U.S. Congress], but the political winds took a turn this year, thanks largely to the efforts of lawmakers in California. The state waged a high-stakes duel with and won after the online giant agreed in September for the first time to comply with a state sales tax instead of fighting it in the courts or at the polls. had vowed to spend tens of millions of dollars on a ballot referendum to overturn the law, which the state countered with a threat to pass the bill as an “urgency measure” that voters could not repeal. ultimately blinked and signed off on a deal in which remote sellers agree to pay the California sales tax after a one-year grace period unless Congress approves national rules.

The California move injected fresh enthusiasm into federal efforts to level the sales-tax playing field. Within weeks, the House and Senate had introduced bipartisan legislation giving states the option of collecting sales taxes from online sellers.
California law already requires businesses and individuals to report and pay use tax at the same rate as sales tax for goods purchased online or out of state and brought in and used in California. Enforcement and compliance on the personal side has been minimal, but the Board of Equalization, the state agency charged with administering the state's sales tax law, has required businesses grossing more than $100,000 per year to register and report and pay use tax on any such purchases since 2009.

See also California Governor signs sales tax law compromise

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