Hi Pros,
I live in California, and I have read a lot about online retailers having to charge me sales tax if I buy online. I thought internet sales were exempt from sales taxes, unless the retailer had a store in the state the product would be delivered in. What gives?
Lisa from California
The times, they are a changin’!
Yes, ripples have begun in this direction. California and Pennsylvania are now requiring online retailers to charge tax on sales for products that will be delivered to their states.
We should have all seen this coming. States, and California in particular, are all struggling for revenue and they see this as an easy way to add to their coffers. Their moves are difficult to fight since there is no coalition of consumers to coalesce and make their voices heard.
Further, brick and mortar stores are all for this, as they believe this will level the playing field for them. Many California physical stores complain that their customers do buy online to save from paying the state taxes, and that this gives the online retailer a price advantage.
California’s law only requires retailers that have sold over $1,000,000 to California residents over the past year to pay the taxes. Pennsylvania’s law states:
“. . . all online retailers with a presence in the state (which includes anything from distribution/fulfillment centers and sales people regularly entering the state to company trucks making deliveries and advertising relationships where compensation is based upon sales or Website clicks) must collect state “use” or sales tax or face penalties.”
The challenge for these states is how to enforce the requirement to collect and pay these taxes. If a consumer in Pennsylvania buys a product from a seller in Colorado, who is going to regulate the merchant? It sure won’t be Colorado, as they have no financial motivation or pay off to do so!
The Pros expect this trend to continue from cash starved states looking for revenue sources. We do not expect the federal government to ignore the potential revenue bonanza a federal online sales tax would bring in.
Happy Tubbing!
Ethel Elliott
