Federal Legislation On Online Sales Tax On Its Way

It seems pretty clear that there is going to be federal legislation in the area of sales taxes for online sales. There are bills pending in the House and Senate that address the topic. The bills would allow states to compel online retailers to collect sales taxes. Of course, because it’s an election year, and because it involves the word “taxes” it’s all kind of dicey. Some legislators who’ve signed off on the Grover Norquist pledge to never, ever, not in a gazillion years even so much as think about raising taxes, worry that this bill is a tax increase. But there are Republicans in Congress and in state government, including New Jersey’s Chris Christie, who see it as a states rights and fairness issue. And I think they have the better argument. What a lot of online shoppers either don’t realize or choose to ignore is that there is sales tax due on purchases made online. But unlike sales at traditional brick and mortar locations, online retailers aren’t required to collect the taxes. So technically, the purchaser should pay the amount due. But of course, that rarely happens. The federal legislation would simply give states the power to be more efficient about collecting taxes that are already due. I’m not sure that any fair minded person could call that a tax increase. But it would bring in an estimated $23 billion in revenue here.