One of the biggest advantages of shopping online is avoiding sales tax. If you buy a product from a company that does not have a brick and mortar store in the state that you live in, you don’t have to pay sales taxes. That’s the advantage at the moment. It’s a considerable savings that can amount to as high as 10 percent of the purchase in some locations.
Recently, Amazon has been backing a bill that will allow states to collect taxes from online retailers. Amazon is perplexedly behind it, since from their point of view, the taxes doesn’t really affect them that much. The sales taxes collected will be shouldered by you and me, the online shoppers. So, why would Amazon risk this by shooting itself in the foot? Wouldn’t shoppers look for alternative ways to shop somewhere else other than Amazon?
Proponents of the legislation argue that this bill will level the playing field between brick and mortar and online companies. Point taken. On the other end, opponents are arguing, that online retailers will not really benefit from collecting out of state taxes. In addition, who wants to deal with 9000 tax codes across the United States. The bill does have an exemption to online sellers with less than $500,000 in remote sales. That’s the key. More about this later.
How will each individual state enforce taxes? Will they force online shoppers to state their online purchases on their returns? Does that work? Will people be honest enough to state their online purchases on their returns? Will states force online retailers, such as Amazon, to provide them tax information every year? It sounds like a much more complicated mess than it looks.
As I mentioned earlier, there are online stores that are exempted. Stores that have less than $500,000 in remote sales. The key will be finding smaller online stores that wouldn’t charge you sales taxes for your online purchases. Maybe, this would encourage would-be entrepreneurs to build smaller online stores.
Potentially, this could level the playing field to a field that politicians are already trying to level.