Hurry Up and Shop Online to Save – Sales Tax May be here Soon

Downtown shops like those in Glen Ellyn and Wheaton and all over America should be excited about what is going on in the House Committee regarding charging sales tax for online purchases

As you probably know, most state budgets are in the red these days and they are looking for any means possible to get people to pay them more money.

Next on the list is a “sales tax” for online purchases.  That could mean paying tax on all your online purchases.  For some states that will mean collecting $20 + million a year in sales tax.

Here is an example of how the law works now: Say a homeowner in rural Wisconsin orders a $200 patio chair from an “e-tailer” in New Mexico that doesn’t have a store in Wisconsin, which levies a 5% sales tax. The buyer doesn’t owe sales tax in New Mexico, and technically he doesn’t owe $10 of sales tax to Wisconsin. But he does owe $10 of use tax to Wisconsin. The sponsors of the bill want the states to get that $10.   

If the law changes, it will end a controversy bedeviling federal courts since the 1930s. In the last major go-round—Quill Corp. v. North Dakota in 1992—the Supreme Court refused to impose collections on out-of-state customers, citing a 1967 decision relying on due-process and interstate-commerce arguments. But the Quill decision also reminded Congress it had the power to change the law, and now it might do so

Of course brick & mortar retailers would be for this since they are at a significant disadvantage as they have to collect sales tax when online retailers do not.  Many retailers have gone out of business in part because they cannot compete with the cheaper online competition.

I will be doing my online Christmas shopping early this year for larger purchases as I figure it will save me a bundle, you should consider doing the same.

Link to latest information below:

House committee to weigh Internet sales tax legislation

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