States Pay the Price When You Buy Online – The New York Times

Can online retailers be compelled by law to collect a sales tax? According to the Supreme Court, no — but that could change if, in the next few weeks, it decides to take up a case challenging the current rule.

The court should reconsider the prohibition, because the law takes a hammer to the fiscal health of states, which lose out on millions, if not billions, of dollars in sales tax revenue. Staggering amounts of digital transactions occurred this year: an estimated $6.59 billion in digital transactions on Cyber Monday (which would be a record), and an estimated $100 billion for the holiday season.

Customers may be confused: Some online retailers do collect sales taxes, at least sometimes. Amazon, for example, collects them on Amazon transactions, but not on third-party-vendor transactions sold through Amazon.

The reason why these taxes are not paid is because the courts have ruled that the record-keeping requirements “were indeed undue burdens that would ultimately harm the national economy.”

Really? Is it that hard? Yes, filing sales tax in 50 states – well, not exactly, since some states don’t have sales tax – takes time, but if you’re selling to a state, why shouldn’t you be required to do so? In the EU, there are 28 states, and you have to collect VAT and file reports. Sure, it’s a bit complicated, but it’s the cost of doing business. When you think of the unfair advantage that online sellers have, if they’re not charging sales tax, and the amount of money your state is losing, it’s worth a bit of processing to even things out.

Source: States Pay the Price When You Buy Online – The New York Times