States sales taxes that now go largely unpaid on internet and catalogue sales
look increasingly likely to be collected by Uncle Sam in the near future, USA
The newspaper reported that Senate negotiators have agreed a deal that would
extend a stay on new Internet taxes until 2006 but lead to increased collection
of sales taxes.
USA Today said that the bipartisan compromise would not immediately change
the current situation where consumers buying goods through the internet or from
catalogues avoid paying sales taxes.
States would have five years to simplify their sales tax-collection systems,
a concession to state and local governments that rely on sales taxes for about
one-third of their revenue, the paper said.
If Congress approved the plan, taxes on almost all internet and catalogue purchases
would then be collected.
USA Today said that the fight over taxing internet sales pits the high-tech
industry and anti-tax campaigners against state and local governments in need
of revenue and ‘bricks-and-mortar’ retailers who want a level playing field.
Internet sales in the United States are handled the same way as catalogue and
telephone sales, the newspaper said.
If the retailer has a store in the purchaser’s state, a sales tax is added
to the bill. But the U.S. Supreme Court has ruled that companies cannot be required
to collect taxes in states where they have no physical presence, USA Today added.
The paper said that states would have five years to write a simplified tax-collection
plan and would have to create uniform definitions for goods and services.
They would also have to agree on one national sales tax rate or one rate per
state, and Congress would have to approve the plan. Businesses with $US5 million
or less in annual revenue would be exempt.
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