blog.FedTax.net

A: Short Answer:  Internet Sales Tax is not a new tax, simply a largely uncollected tax.

A: Long Answer:  Many taxpayers are surprised to learn that even though they were not charged sales tax when they purchased something online, they still owe local “use tax” on that purchase.  Use taxes are the same rate as sales taxes (calculated as though the purchase happened at your doorstep).  Unfortunately, collection and enforcement of use taxes is cost prohibitive – states revenue departments simply don’t have the resources to track down every iTunes download or eBay purchase.

The new laws being considered would eliminate the current taxpayer obligation (or liability) to report and pay use taxes for items or services purchased over the Internet.

The new laws would shift the burden of tax collection to the point of sale, exactly the same as if you walked into your local convenience store to buy some batteries. 

Some Internet merchants have begun to complain that under these new laws, keeping track of all possible tax codes and jurisdictions would be simply too complicated.  This is where we come in – at Fed-Tax.net, we are eliminating all of that complexity – at zero additional cost to the merchant or the taxpayer (thats’ right – our services are absoultely FREE)

A:  Short Answer: It is simply unfair to require local businesses to collect and remit local sales taxes, while not requiring so-called “remote sellers” to do the same.

A: Long Answer: Historically these remote sellers were primarily mail order catalog merchants.  Although the US Supreme Court uniformly agreed (in 1967 and 1992) that these remote sellers should be required to remit local sales taxes as if they were local businesses, they also conceded that requiring these remote sellers to keep track of over 13,000 state and local tax codes would be prohibitively cumbersome and costly.  They further ruled that only congress has the authority to modify such rules of interstate taxation.  Consequently, the laws of the land settled on the side of allowing remote sellers to be exempt from collecting local sales taxes, to eliminate the competitive disadvantage which would have been caused by mandating local sales tax compliance.  However, with the success of the Internet over the last twenty five years, this disadvantage has shifted from the remote sellers to the local businesses.  Today, while local vendors are required to collect local sales tax, they are competing over price with Internet vendors unencumbered by such additional price pressures.

A:  Short Answer:  No.  Or at least not yet, but probably very soon.

A: Under the Streamlined Sales Tax Agreement guidelines, sales taxes are to be collected by Internet merchants uniformly on all sales (including leases and rentals) involving tangible personal property, or digital goods and services, including telecommunications and Internet access services.