Sales tax on online shopping coming?

Posted in :

Reading Time: < 1 minute

I read two news this week, which makes me think this is coming. Keep in mind many local governments are upside down in terms of budget and debts, any tax revenue helps. Collecting tax revenue from online merchants in remote places like Seattle (HQ of Amazon) is a convenient choice.

Expedia (Nasdaq: EXPE) tax lawsuit (source: hotel-online): from my reading, basically the dispute is around the basis of tax, we know Expedia sells hotel room at discounted rates, but the local government (Columbus, GA in this case) think it should be the listed price. I am not lawyer but I lean towards the discounted rate.

Amazon may stop doing affiliate business. Quote WSJ Amazon Threatens Cuts Over State Taxes:

The Wall Street Journal reports that (Nasdaq: AMZN) may stop doing business with some of its marketing affiliates over state taxes.

According to the paper, North Carolina is among several cash-strapped states trying to force retailers to collect taxes on online sales. North Carolina is close to passing a law that would force online retailers to collect a 4.5% sales tax from marketing affiliates, people who get a sales commission from online customer referrals.

The Journal reported that Amazon said it would stop doing business with North Carolina by July 1 if the law takes effect.

Other states are weighing similar laws, including Hawaii, California and Connecticut.

My take
This is inevitable in my mind. In the early days of Internet, E-commerce, the government did not collect sales tax for two reasons:

1) The online business is small, not much to collect;

2) Help the online business to grow;

Now we are at a stage to get the eggs from chickens.

%d bloggers like this: