TLP: We Were Supposed to Do What?

online sales tax
Online shopping has a lot of advantages. Lots of retailers to choose from, pretty good selection, no need to deal with traffic or gas or all those annoying people out shopping in stores. Prices are usually competitive and, oh yeah, there's no sales tax, at least in practical application.

Well, guess what? Like a million other things, it seems that this little freebie nobody seemed to give a shit about is fucking things up.

What do your 2010 online holiday shopping purchases have to do with the budget gaps many states are struggling to fill right now? In the eyes of some state and federal legislators, the sales tax that is not being collected by many online merchants is revenue that could help stem the bleeding of state treasuries.

What most shoppers don't know is that they should be paying taxes on most online purchases, even when the retailer doesn't collect.

Because of two decades-old Supreme Court decisions, a state cannot require "remote sellers" — any business without a physical presence in that state — to collect and remit sales tax. Despite this, sales tax is still due in most states, and it's the purchaser's responsibility to pay it.

In instances when online retailers don't collect sales tax, 45 states (and the District of Columbia) require residents to calculate and remit the tax directly to their local taxing authority. When a sales tax is paid in this manner it's called a "use tax," and it's not new. Use tax laws have been on the books in most states much longer than the internet has been around, let alone "one-click" shopping.
A few weeks ago, the WSJ ran an article on this issue and cited a study by University of Tennessee economists that projected a loss of $10 billion to state and local governments this year from uncollected taxes for online shopping. Surprise; they now think that figure will be higher.

Some retailers are fighting back. The Lazy Paperboy went to a bookstore recently looking for a new book. Sure, I have a Kindle and enjoy thumbing my way through an adventure. But sometimes, you want the hefty, meaty version to hold in your hands. The book wasn't in stock, so I said I'd order online. Same company and cheaper, it looked like, too. But the sales clerk offered to order it for me at the online price and ship it to me for free, flat out saying that collecting sales tax (as well as the sale) mattered to the store. So I pay the sales tax, which is less than the online shipping would have been, and the store gets a sale. Win-win.

And that always makes for a happy ending.

The Lazy Paperboy

Some say he’s half man half fish, others say he’s more of a seventy/thirty split. Either way he’s a fishy bastard.