Wednesday, April 3, 2013

On-line Tax Free shopping could soon become a memory

A recent New York court ruling that requires online retailers to collect state sales tax will not have an immediate impact in Massachusetts, but it could push Congress to change e-commerce laws so states can claim billions in tax revenues lost to online purchases. 
The question of whether states can require e-tailers to collect sales tax is a long-running issue that has mostly been decided in favor of the online companies. Federal courts have consistently ruled that retailers must have a physical presence in a state — such as employees, offices, and warehouses — to be required to collect sales taxes. That has allowed online retailers to offer many customers tax-free shopping.
But New York and a handful of other states are expanding the definition of physical presence to include so-called affiliates, independent contractors who maintain their own websites and are paid to promote the Internet retailers on their sites. In the New York case, two of the nation’s biggest online stores, Amazon.com Inc. of Seattle and Overstock.com Inc. of Salt Lake City, argued that these affiliates were not employees and did not constitute a physical presence in the state.
Read the full story HERE.

How does taxing online purchases level the playing field with physical purchases? Not only will you pay taxes like going to a physical store you still will need to pay for shipping. Advantage now towards a physical store purchase where shipping is not an issue.

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