Is the end near for tax-free shopping on the Internet?
We just finished up a holiday shopping season in which I didn’t set foot in a single store. I completed 100 percent of my Christmas shopping online, from the comfort of my home (as I would never shop from the office). That means there’s a good chance I didn’t spend a single penny in sales tax.
It seems that I am, in the eyes of some governments, a problem. Or at least part of a problem they’d like to do something about.
Increasingly, states are taking a harder look at the subject of tax-free Internet sales, according the Associated Press.
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.
The way it works now is that states can only force a business to collect sales taxes if that business has a physical presence in the state. That’s why sites like Amazon.com, generally away with not charging sales tax. It’s a big advantage they have over traditional brick and mortar mortal retailers.
New York is one of several states that’s gotten more aggressive - redefining exactly what a “physical presence” is. New rules in that state say a company has a physical presence if it pays anyone inside the state to help it reach customers.
Since some Web site operators within New York are compensated for posting ads that link to sites like Amazon, the online retailers would have to collect taxes.
Two top online retailers - Amazon and Overstock.com - are suing the state over its new laws. I have to believe this one is going to be watched very carefully by other states, all manner of retailers and shoppers like me.
Tim has covered a wide range of topics, including tourism, crime, aviation and gambling, since becoming a reporter in 1990. The Oklahoma native joined the Post-Dispatch in 2007 after spending nine years in Orlando. In his spare time, he's often exploring one virtual world or another. He can be reached at tbarker@post-dispatch.com. 
it was only a matter of time. soon, you have to pay shipping and sales tax, will give online retailers a hit. Government can’t seem to let any revenue streams pass by unmolested. except taxing pot, they don’t seem to have caught onto that yet.
Probably half of my Internet shopping is already taxed– it’s with stores who don’t carry my sizes in the store. Right now, shipping vs taxes means the tacked on costs are a wash–actually the shipping from some places is usury to start with– compare the shipping with what USPS/UPS actually charges and you’ll see what I mean. If the idea is to deep six what remains of the the eoonomy, this is the way to do it!
Good point about the shipping costs. Though, sometimes you can find retailers who ship for free in some circumstances. But I guess we also have to factor in gas costs - depending on how far you drive to the store.
The thing I have trouble putting a price on is the convenience factor and not having to deal with crowds - especially during the holiday shopping season.
What’s a “brick and mortal” retailer? Shouldn’t that be “mortar”?
Yeah but isn’t it comforting to know that money is being skimmed and sent to Israel to fund the Palestinian Holocaust?
Hey! You’re the ones that are giving Israel a blank check not me and you’re the ones letting them behave like Nazis. So don’t blame me for either. I’d attack Israel and level it and then give it back to the Palestinians that it was stolen from.
Of course you all know, that sales tax only apples to “retailers” who operate in the corporate form and acquire a retail sales permit from the state for exercising that “privilege”. If you are not a corporation, do not possess a retail sales tax permit issued by the State, the law does not apply to you. Mon and pop are NOT retailers.
Missouri Revised Statutes
Chapter 144
Sales and Use Tax
Section 144.010
Definitions.
(2) “Business” includes any activity engaged in by any person, or caused to be engaged in by him, with the object of gain, benefit or advantage, either direct or indirect, and the classification of which business is of such character as to be subject to the terms of sections 144.010 to 144.525. The isolated or occasional sale of tangible personal property, service, substance, or thing, by a person not engaged in such business, does not constitute engaging in business within the meaning of sections 144.010 to 144.525 unless the total amount of the gross receipts from such sales, exclusive of receipts from the sale of tangible personal property by persons which property is sold in the course of the partial or complete liquidation of a household, farm or nonbusiness enterprise, exceeds three thousand dollars in any calendar year. The provisions of this subdivision shall not be construed to make any sale of property which is exempt from sales tax or use tax on June 1, 1977, subject to that tax thereafter;
Missouri Revised Statutes
Chapter 144
Sales and Use Tax
Section 144.020
Definitions
Rate of tax–tickets, notice of sales tax–lease or rental of personal property exempt from tax, when.
144.020. 1. A tax is hereby levied and imposed upon all sellers for the privilege of engaging in the business of selling tangible personal property or rendering taxable service at retail in this state. The rate of tax shall be as follows:
If you are a Citizen exercising your right to buy, own, hold, and sell their property and not operating in the corporate form, you are NOT required to collect and pay sales tax. Don’t deem to understand the law if you don’t study the law. The State will allow you to mis-classify yourself and gladly take the money if you want to say you need the permit and pay the tax. Your error results in revenue for them.
I advise you to read the law carefully and not assume it applies to everyone.
The government needs to decide if it wants to tax earnings and encourage consumption, or tax consumption only and encourage earning & saving. Oregon doesn’t have any sales tax at all, online or no, and gets by fine with the income tax. I’d rather pay once all upfront, but there are sound reasons for taxing consumption (social & environmental reasons, mostly) and sound reasons for taxing earning instead (actual economic reasons). One or the other though, please!
I do almost all of my shopping on amazon.com, where everything ships 2d Day Air for free (as a Prime member, and it is well worth it - electronics, groceries, toys for the kids, outdoor equipment, clothes, all of it is available on Amazon). When I shop elsewhere, I sign up for their internet newsletter and wait until they have a free shipping special or until I want enough items that meet their free shipping minimum. No tax, no shipping, no gas, no crowds, no hassle - it’s the only way to shop!
The state and local governments are digging deeper into our pockets, when I go to town to buy something the tax rate now is 8&1/4 percent. If only they could figure out how to tax the air we breathe.
Congratulations Tim! You managed to avoid contributing to the local schools, road upkeep, state police and all other Missouir/city government functions. Way to go! I do suppose that you won’t be complaining about any government cuts in services, funding shortfalls or local stores laying off employees. Right?
The internet is not some wonderful special genie that should be allowed special privileges. As part of the American economy, users should have to pay their fair share. What is needed is one central database with the different tax rates of states and cities, where a server could automatically input the type of item and the sales tax due would be returned.
I have bought items over the internet. But those tend to be things I can’t get locally. I don’t use it with the gleeful thought of avoiding sales tax.
The internet is a convenience. It’s not magical or special. So purchases from it should be taxed like everything else.
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