Internet Sales Tax: Coming Soon?
Do you sell products over the Internet? If so, soon you may have to collect sales tax on all of your U.S. sales. New legislation will be introduced in the U.S. House and Senate that, if passed, will give the states the power to impose taxes on Internet sellers who have no employees, agents, or property in the state.
This latest bill, known as “The Main Street Fairness Act,” is the most recent in a series of similar bills. It would overturn the U.S. Supreme Court’s 1992 decision in Quill v. North Dakota, in which the Court held that a state could not require a seller to collect sales tax when the seller did not have employees, agents, or property in the state.
For ten years, state and industry advocates have worked on a project called the Streamlined Sales Tax Project. It’s aimed at simplifying sales and use tax collection by making sales tax laws the same across the country. Presently, the project is elective: sellers may volunteer to participate in the Streamlined Sales Tax Project and collect sales tax in all states that are members of the project. Doing so entitles them to partial amnesty for prior sales tax problems. The proposed federal legislation would allow states to enact laws making participation in the project mandatory.
For Internet sellers worried about their bottom lines, there is an upside. The proposed legislation will require states to pay sellers for collecting sales taxes. Also, smaller sellers may be exempt.