Tax-free Internet shopping days could be numbered

April 15, 2008 – 2:26 PM

If tax-hungry politicians get their way, the days of ordering items over the Internet and not paying sales tax may become just a fond memory.

Right now, if a California resident orders something from Seattle-based, for instance, he or she won’t be charged sales tax at the time of purchase. That’s because Amazon doesn’t have offices in the state of California.

Pro-tax politicians want to change this by allowing California to force Amazon to collect and submit sales taxes–and they may have found an ally in a U.S. Congress that’s controlled by Democrats. 

Two bills are pending in Congress that would allow tax collectors to target out-of-state Internet and mail-order retailers, and their supporters are optimistic about their political prospects.

“I certainly would love to see a floor vote,” said Neal Osten, federal affairs counsel for the National Conference of State Legislatures (NCSL), a lobby group for state politicians. “We’ve heard encouraging words from the Democratic leadership in the House.”

Meanwhile, pro-tax states are trying their own ways to circumvent a long-standing rule saying a retailer must have physical presence before it can be forced to collect taxes. One effort came from New York state, where legislators recently approved a measure requiring Amazon and other online retailers (that lack a physical presence in the state) to collect sales tax on New Yorkers’ purchases.

Source: CNet

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