Well this kinda sucks, but it was bound to happen. Have you noticed that your online orders are being taxed more now than ever? I certainly have.
According to Forbes.com, consumers will pay sales tax on half of their online purchases this Christmas.
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That’s a bummer considering one of the lures of shopping online has been avoiding sales taxes. After all, the combined state and local sales tax levy now averages more than 8.5%, the highest ever, according to Vertex, which sells tax collection software. That average doesn’t include Delaware, Montana, New Hampshire and Oregon, which don’t have sales taxes.
The Supreme Court has ruled that a state can only require a merchant to collect the tax if the merchant has a physical presence in the state. That’s why Amazon.com, the largest online retailer, collects sales taxes only on items shipped to Kansas, Kentucky, North Dakota and Washington, where it has offices or warehouses.
The states are still missing a lot of tax money–$15 billion a year or more. And with online sales climbing 20% a year, their losses will grow. But state enforcement pressures, combined with traditional bricks-and-mortar retailers’ success on the Web, has led to increased tax collection online.
By collecting tax, retailers are freer to integrate their online, bricks-and-mortar and service operations. Customers, it turns out, like being able to return a defective DVD player purchased online to a local store. But once a retailer offers hands-on services in a state, that state has a legal hook to demand its taxes be collected.
Despite such developments, the states won’t rest until Amazon itself caves. So the skirmishing continues. Last month, Illinois’ attorney general won a state appeals court ruling that will allow the state to continue to pursue a lawsuit against a laundry list of online sellers, including Amazon.
Read "Point, Click, Pay Tax"
