The “Main Street Fairness Act” is drafted “to grant states the authority to require all sellers, regardless of nexus, to collect those states’ sales and use taxes“. What does this mean, and how will it affect you as a consumer or an Internet merchant?
Get answers to your questions from experts at The Federal Tax Authority.
May 5, 2009 at 5:08 pm |
What Internet purchases will be subject to sales tax?
May 5, 2009 at 5:11 pm |
Thank you for the question. Please refer to our previous response to this question
May 5, 2009 at 10:01 pm |
I have read that compliance costs of The Streamlined Sales Tax Project — especially for small firms – could well outweigh the probable benefits of taxing all remote purchases.
Couldn’t the states recoup lost revenue and help make-up budget shortfalls with more aggressive pursuit of multi-channel, multi-state retailers and greater use tax enforcement, without a federal mandate imposed on all inter-state retailers?
May 5, 2009 at 10:22 pm |
Compliance costs for small and large firms will be minimal once Fed-Tax.net launches it’s sales tax lookup and management service – details to come soon!
As far as states engaging in “more agressive pursuit” – states are already engaged in extensive enforcement efforts for larger retailers as you describe.
The larger issue at hand is regarding smaller purchases – a significant share of e-commerce is conducted by “small” Internet retailers (those with less than $1M in revenue). Although seemingly small due to their lower annual sales revenue, thier impact on lost states revenue adds up quickly due to the sheer numbers of these smaller vendors. A study compiled by the Univeristy of Tennessee calculated that in 2007, the states lost approximately $2.2B in sales tax revenue from e-tailers at this scale.