Online Businesses to Collect Sales Tax For All 50 States?

It was just a matter of time until state politicians persuaded federal politicians to pass a law to overcome a 1992 Supreme Court ruling that says you don’t have to collect sales tax unless you have a “physical presence” in that state so that you, as an online business owner, will now have to collect sales taxes on online sales for all 50 states.

Why? Because it’s the “fair” thing to do.

I’ve followed this for years now where states have called “affiliates” a physical presence in order to force to collect sales taxes…

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Now, Amazon is on the side of the government. According to a Wall Street Journal article:

In addition to expected support for the bill from big-box and Main Street retailers, even Amazon now backs a national solution, as long as it would cover online rivals. One reason is that Amazon plans to offer same-day delivery in some areas, analysts and competitors say, which will require it to have more warehouses—and thus open itself up to more state sales taxes. Most of its online competitors oppose the bill.

That’s because Amazon’s “online competitors”, like you and I, don’t have the accounting departments to keep track of 50 sales tax rates and write checks to 50 states every month. I don’t know about you, but I’ve found that filling out sales tax forms for just one state is a royal pain in the butt. Multiply that times fifty?

Like everything else, the devil will be in the details. What no one in the government is saying is how exactly this is going to work. Through software? You better hope your shopping cart has an update service that can incorporate these new regulations whenever they come out or you may be stuck switching to a new shopping cart system.

Will this just cover physical products or will it include digital products like some states are doing now? Who knows?

Who’s going to keep track of this system, who’s going to enforce it? The IRS? The ICC? Some “new” government agency, like the 181 being created under Obamacare?

I’m sure the government will come up with a cheap and painless way for all of us to collect and pay sales tax to 50 different states. Right.

I’ll keep you posted.