An article on TheStreet calls the lack of online sales tax collection “sales-tax evasion” and says that it’s likely to come to an end soon.
The article uses strong language to compare online retailers that don’t collect sales tax to the “gray-goods stores” of the past:
There used to be a time when sales-tax evasion was a grimy business. It required a sleazy merchant and a greedy customer, conspiring to make the transaction in cash, “tax included” (wink-wink). Once there was a string of electronics stores on Manhattan’s Lower East Side that survived by non-taxed transactions in “gray goods,” in which the state tax authorities (and sometimes customers) were systematically cheated.
Today, of course, nothing has changed.
The merchants are still sleazy, the customers are still greedy — only now, sales-tax evasion is both commonplace and organized. The name for this particular variety of organized crime is known as “Internet retailing.”
As you might expect from that opening, the article doesn’t pull its punches. It makes for a read that’s compelling as well as informative. Witness this paragraph on online retailers’ losing battle against sales tax collection:
If the Internet retailers get socked with a sales tax, they have pretty much themselves to blame. They’ve been outmaneuvered by the brick-and-mortar stores, who have successfully presented this as a David vs. Goliath battle. But in a sense there’s also the historical fact that no business model predicated on cheating the government ever works. Amazon, by supporting the legislation, is simply going along with the march of history.
According to the article, legislation allowing states to require online retailers to collect sales tax is almost certain to pass. And we were thrilled to see this comment on the argument that collecting sales tax online is too complicated or burdensome:
Amazon’s acquiescence, meanwhile, made mush of [Overstock.com CEO Patrick] Byrne’s dubious claim that modern software wasn’t up to the task of doing something as complex as computing the correct sales tax for each customer.
As our regular readers know, we created TaxCloud expressly to make collecting sales tax easy and inexpensive for online retailers. It’s hard to see how anyone could argue that it’s too difficult to collect sales tax when a free service like TaxCloud is available to not only calculate the tax due in real time, but also to file sales tax returns, process exemptions, and handle any audits.
We recommend reading the entire article for an interesting take on the online sales tax collection situation.
The article ends by taking a moral stance on online sales tax with this closing paragraph:
I know, paying taxes is annoying. But even the Internet retailers, their laissez-faire anti-tax arguments notwithstanding, rely upon government services like the Postal Service to get goods to their customers. And if they use private services like FedEx, those package-delivery trucks travel on roads maintained by local taxes. For years, the net has taken advantage of those goodies without collecting a dime, and profiting from the resulting “discount.” It’s high time that free ride came to an end.