HR 5660: Internet Sales Tax Heats Up

HR 5660, a bill before Congress known as the “Main Street Fairness Act," would require online businesses and entrepreneurs to collect and remit sales taxes from each customer.

Congress makes the following findings:

(1) States should be encouraged to simplify their sales and use tax systems.

(2) As a matter of economic policy and basic fairness, similar sales transactions should be treated equally, without regard to the manner in which sales are transacted, whether in person, through the mail, over the telephone, on the Internet, or by other means.

(3) Congress may facilitate such equal taxation consistent with the United States Supreme Court's decision in Quill Corp. v. North Dakota.

(4) States that voluntarily and adequately simplify their tax systems should be authorized to correct the present inequities in taxation through requiring sellers to collect taxes on sales of goods or services delivered in-state, without regard to the location of the seller.

(5) The States have experience, expertise, and a vital interest in the collection of sales and use taxes, and thus should take the lead in developing and implementing sales and use tax collection systems that are fair, efficient, and non-discriminatory in their application and that will simplify the process for both sellers and buyers.

(6) Online consumer privacy is of paramount importance to the growth of electronic commerce and must be protected.

 The debate is heating up and everyone from Amazon.com and eBay.com are fighting the Bill.  I expect the conversations to become more and more heated as November elections draw closer.

Internet Sales Tax

The specter of an online sales tax doesn't seem to be willing to go away. One of the advantages of Internet shopping is the absence of any sales tax which can amount to a decent cost saving on the average purchase, but this bargain for consumers represents lost income for States across the US that are battling to close the gap on ever-increasing budget deficits.

It is not surprising then that Democratic Congressman Bill Delahunt of Massachusetts once again raised the online sales tax bogey. He first brought the bill for consideration in 2007, but now many in Washington think that he may have better luck getting it passed in 2010. For shoppers that have gotten used to saving 5 to 10 percent by shopping at websites like Amazon, they might be getting a rude awakening.