Events Calendar
In This Section
Consumer group warns about toy hazards
Americans gloomy on economy heading into holidays
Banks earn $2.8 billion in third quarter; insurance fund in the red
Akron, Summit County jobless rates increase
Home prices rise for fourth month in a row
Economy's rebound not as strong as first thought
Area home sales fall as U.S. sees gains
Most Read Stories
2 men shot during party in Fairlawn
Cancellation of Christmas not an option
Akron man killed in crash on his street
Akron Children's Hospital CEO, wife announce $1 million gift to support research
Victim of beating in Kent last week is declared dead at Akron hospital
Police: Pennsylvania man killed misbehaving puppy before Steelers game
Akron Circle K store robbed for second time this month
Several people hurt in Akron crash
KSU suspends basketball player
Police accuse bank robbery suspect of gobbling up note (with dashcam video)
Blogs:
Pets:
A Dog Named Christmas – Pet for the Holidays
The Heldenfiles:
Viewing Notes
Patrick McManamon:
Of pass interference and alleged "fake" injuries
Akron Zips:
No. 1 Akron to play Stanford next
Tribe Matters:
Seven players added to Tribe’s 40-man roster
Cleveland Browns:
Audio: Mangini disputes Poteat call, accuses Lions of faking injuries
Kent State Sports:
Flashes travel to Florida Atlantic
Cleveland Cavaliers:
Gameblog: Cavs vs. Philadelphia 76ers
Buckeye Blogging:
Buckeye Football – Present and Future
Varsity Letters:
Gulley to visit Central Michigan in December
All Da King's Men:
The Onion, By Any Other Name…
Blog of Mass Destruction:
Glaring Contradictions
Akron Law Café:
Don't Try to Have Fun if you are Depressed
See Jane Style:
Vintage Chic
Car Chase:
What Automotive Thing Are You Thankful For?
Let's Talk Real Estate:
Faye Dunaway to be Evicted?
Ohio Travels with Betty:
Monique asks how to get tickets for the Polar Express.
Sound Check:
Steely Dan Plays "The Royal Scam" at E.J. Thomas Hall
HRLite House:
Personal Rant – Why I am Glad I live in NEO
Akron Gamer:
Nintendo's Mario endures even as games come and go
States like Ohio want to increase revenue in faltering economy
By Rachel Metz
Associated Press
Published on Wednesday, Jan 14, 2009
NEW YORK: Shopping online can be a way to find bargains while steering clear of crowds — and sales taxes.
But those tax breaks are starting to erode. With the recession pummeling their budgets, states increasingly want to fill the gaps by collecting taxes on Internet sales, which are growing even as the economy slows.
And that is sparking conflict with companies that do business online only and have enjoyed being able to offer sales-tax-free shopping.
One of the most aggressive states, New York, is being sued by Amazon.com Inc. over a new requirement that online companies collect taxes on shipments to New York residents, even if the companies are located elsewhere. New York's governor also wants to tax Taxman covers and other songs downloaded from Internet services like iTunes.
The amount of money at stake nationwide is unclear; online sales were expected to make up about 8 percent of all retail sales in 2008 and total $204 billion, according to Forrester Research. This is up from $175 billion in 2007.
Based on that 2008 figure, Forrester analyst Sucharita Mulpuru says her rough estimate is that if Web retailers had to collect taxes on all sales to consumers, it could generate
$3 billion in new revenue for governments.
It's unclear how much more could come from unpaid sales taxes on Internet transactions between businesses. But even with both kinds of taxes available, state budgets would need more help. The Center on Budget and Policy Priorities estimates that state budget gaps in the current fiscal year will total $89 billion.
Collecting not simple
Collecting online sales taxes is not as simple. A nationwide Internet business faces thousands of tax-collecting jurisdictions — states, counties and cities — and tangled rules about how various products are taxed.
And a 1992 U.S. Supreme Court ruling said that states can't force businesses to collect sales taxes unless the businesses have operations in that state. The court also said Congress could lift the ban, which remains in place — for now.
As a result, generally only businesses with a ''physical presence'' — such as a store or office building in a state — collect sales tax on products sent to buyers in the same state. For instance, a Californian buying something from Barnes & Noble Inc.'s Web site pays sales tax because the bookseller has stores in the Golden State. Buying the same thing directly from Amazon would not ring up sales tax.
That doesn't mean products purchased online from out-of-state companies are necessarily tax-free. Consumers are usually supposed to report taxes on these items. This is called a ''use tax,'' but not surprisingly, it tends to go unreported.
In hopes of unraveling the complex tax rules — and bringing states more money — 22 states and many brick-and-mortar retailers support the efforts of a group called the Streamlined Sales Tax Governing Board. The group is getting states to simplify and make uniform their numerous tax rates and rules, in exchange for a crack at taxing online sales.
Among other things, participating states need to change how they define things such as ''food'' and ''clothing.'' For example, one state might now consider a T-shirt clothing and tax it as such, while another might consider it in a sporting goods line and tax it differently.
1,100 retailers register
In response, more than 1,100 retailers have registered with the streamlining group and are collecting sales taxes on items shipped to states that are part of the agreement — even if they are not legally obligated to do so.
The streamlining board also is lobbying Congress to let the participating states do what the Supreme Court ruling banned: They could force businesses to collect taxes on sales made to in-state customers, even if the businesses don't have a physical presence there.
New Jersey, Michigan and North Carolina are among the largest of the 19 states that have adjusted their tax laws to comply with the group's streamlined setup. Washington was the only state to join in 2008, but three more states — including Ohio — are close to becoming full members of the group. And Scott Peterson, the group's executive director, expects another seven states — including Texas, Florida and Illinois — to introduce legislation in January that would make them eligible to join.
Undoing the patchwork can be difficult, even if the weak economy increases state motivation to go after online sales taxes. Similar bills have been introduced in several states and failed, sometimes because of the cost of changing tax laws. New York, for example, decided against joining the streamlining board because it would require extensive revisions to its tax rules.
Support growing
Besides various states and retailers such as Wal-Mart Stores Inc., Borders Group Inc. and J.C. Penney Co., the National Retail Federation, the industry's biggest trade group, also supports the Streamlined Sales Tax group.
Companies that handle Web sales only have organized as well. NetChoice, whose members include eBay Inc. and online discount retailer Overstock.com Inc., supports state tax simplification efforts, but its executive director, Steve Del-Bianco, says online retailers should have to collect taxes only in states where they have a physical presence.
But what if the meaning of ''physical presence'' is changed? New York essentially did that in April when its budget included a provision requiring online retailers like Amazon to collect taxes on purchases made by New Yorkers.
NEW YORK: Shopping online can be a way to find bargains while steering clear of crowds — and sales taxes.
Get the full article here.
Comments
Click here to post your comments
Posted 11:42 AM, 01/14/2009
I hope that they do not require amazon to start collecting sales tax. If you combine amazons already low prices, and no sales tax you can great deals. Recently i started using this site to find discounts on amazon:
http://www.zingsale.com
It's a free service that tracks prices of products from online stores (like amazon) and sends you an email when the price drops. I also used it over holidays to save on a new GPS for the car
Akron, OH
Posted 12:31 PM, 01/14/2009
You know, this wouldn't bother me one bit. Fair is fair. I would still shop online for the convenience factor.
Not to mention the fact that since taxes are a percent of the sales price, starting with a lower price like Amazon could offer would still mean lower taxes than buying the same item at Best Buy.
