US allows states to levy sales tax on internet shopping

Summary: U.S. Congress of the United States Senate through the net Purchase tax bill American online shoppers should note: For many shoppers, the days of duty-free shopping on the Internet may soon be over, as most lawmakers in the U.S. Senate have voted for a

U.S. Senate passes net-purchase tax bill

American online shoppers should note: For many shoppers, the days of duty-free shopping on the Internet may soon be over, as most lawmakers in the U.S. Senate have voted for a bill that would allow states to levy a sales tax on Internet-enabled shopping. In the voting procedure for the bill, a total of more than 60 senators voted in support of the bill, exceeding the threshold of at least 51 votes required to approve it.

The bill faces opposition in the U.S. House of Representatives, which some Republicans see as raising taxes. Meanwhile, a broad coalition of retailers is lobbying to support the bill.

Under current United States law, States are required to levy a sales tax only if a retailer has physical facilities in the state. This means that large retailers, such as Wal-Mart, Best Buy and Target, which have chain stores across the United States, must levy a sales tax when selling goods over the internet, while online retailers such as ebay and Amazon do not need to levy taxes, This tax should be levied on online shoppers only in states with offices or distribution centers. As a result, many online sales deals are tax-free, giving internet retailers an advantage over physical retailers.

Under the bill, which has been approved by the Senate, companies must levy a sales tax on products they sell through the Internet, catalogues and wireless and television commercials, and where shoppers live, they pay the tax to the state. For the bill, physical retailers expressed support, while online service providers objected.

As Internet sales have grown, "the pressure on physical retailers is growing, as is the pressure on state and local government sales tax revenues." David French, senior vice president of government relations at the National Retail Federation (NRF), said David Franch. "It is time for Congress to create a fair ' arena ' where all retailers are treated fairly," he said. ”

ebay, on the other hand, says the bill does not protect small businesses enough. Under the bill, small businesses with less than 1 million dollars in online sales will be exempt from the tax, while ebay wants to increase the threshold to $10 million or small businesses with fewer than 50 employees. "Adherence to the 50-state tax code is a major commitment because the process of complying with the tax code is not just as simple as filling in the right tax returns." Said Brian Bieron, senior director of global public policy at ebay, Blaine Billon. "You have to face the fact that all these government agencies have the right to audit you, have the right to challenge you, have the right to put you in court and have the right to prosecute you as long as they feel you have done something wrong." ”

Supporters say the bill is less difficult for Internet retailers to follow. Under the bill, U.S. states must provide free computer software to help retailers calculate sales taxes based on the state in which shoppers live. In addition, States must establish an independent entity to receive Internet sales taxes, so that retailers do not have to pay taxes to counties or cities. Opponents point out that online businesses still have to use the resources to handle sales taxes, and then pay taxes regularly to every state.

U.S. politicians ' support for the bill has crossed partisan lines: the main proponent of the bill is Mike Enzi, a conservative Republican senator from Wyoming State, who Mark Enze with Dick Delbin Dick Durbin, The latter is a Liberal Democratic senator from Illinois State. Supporters say the bill is not a tax increase. In many states, when shoppers submit income tax returns to the tax authorities in their respective states, they are required to pay the sales tax they had previously paid; however, the states complained that few shoppers would follow the tax requirements.

In the Senate, lawmakers from three tax-free states hold the strongest objections. These lawmakers strongly argue that companies headquartered in these States should not have to tax other states. Montana State, New Hampshire State, Oregon State and Delaware State did not levy a sales tax, although two members from the Delaware State voted in favour of the bill. Delaware State has long benefited from shoppers in neighboring states, who come to Delaware State for duty-free shopping, Delaware State Senator Chris Coons Chris Coons said. Tax-free internet shopping will pose a threat to Delaware State's dominance, he said.

Over the past few years, many governors (both Republican and Democrat) have been lobbying the federal government for approval of a sales tax on online sales. As more and more consumers are shopping online, the problem is getting bigger for state governments. According to estimates by the U.S. Business Department, internet sales in the US market last year amounted to $226 billion trillion, up nearly 16% per cent from the previous year.

Last year, U.S. states lost 23 billion of billions of dollars in tax revenues after failing to collect sales taxes outside the state, according to a study published by three business school professors at the University of Tennessee. Of these, about 11.4 billion dollars are not taxed on Internet sales transactions, and others come from tax receipts from sources such as catalogues, mail order and telephone subscriptions. The study was made for the National Congress of the United States (Conference of State Legislatures).