homepage logo

Online store taxes should be the same

By Staff | Oct 15, 2010

In his Sept. 17 article, “Internet should be a tax-free zone,” Elliott Simon seemed to be arguing both sides of the issue at once without a clear understanding of either. But there was one thing he definitely got right that bricks-and-mortar-stores and Internet sellers today “are most often one and the same.” And that’s exactly why both should play by the same tax rules.

In today’s world, merchants are glad to do business any way the customer wants – from a storefront, through the mail or over the Internet and many do all three. Merchandise ordered online and delivered in the mail can often be returned at a local store. Merchandise not in stock locally can be ordered from the same store’s website. And the same retailer may print a traditional catalog for those who prefer paper over pixels.

Arcane rules set by the U.S. Supreme Court say mail-order or Internet retailers only have to collect sales tax from an out-of-state customer if they have a physical presence like a store or warehouse in the customer’s state. But that only makes things confusing for consumers who don’t understand why one retailer who sells on the Internet is charging them tax and the other isn’t. What difference should it make whether the merchant has a store down the street or not?

The retail industry supports a level playing field where all retailers play by the same tax rules regardless of whether they sell merchandise in a traditional store, through the mail or over the Internet. Internet merchants who are not required to collect sales tax from the majority of their customers enjoy an unfair price advantage over local merchants who are required to collect sales tax from everyone. In addition to placing local merchants at a disadvantage, this disparity deprives state and local government of tax revenue they need to provide essential services such as police and fire protection and education. Retailers support federal legislation that would make it easier for states to require all Internet retailers to collect sales tax the same as local stores.

With more than $200 billion in annual sales, the Internet is no longer a startup that needs special treatment, if it ever did. The time for equal tax treatment between Main Street stores and online stores has come.