Online Sales Tax: The New Reality - The Blytheco Blog
Online Sales Tax: The New Reality

Online Sales Tax: The New Reality

As reported on

“38 states and the District of Columbia agreed on a uniform means of collecting an online sales tax. It seems that some online retailers have recognized this agreement and have begun to collect sales tax on online purchases. Previously, it was rare for online retailers to collect sales tax from customers in a different state. With the current agreement among states, if online retailers begin collecting now they will not be liable for any sales tax not collected in the past.

Amazon began collecting a sales tax on orders beginning February 2. A sales tax is also being collected at online stores hosted by Amazon including Macy’s, Target, and Toys ‘r’ Us. Along with Amazon, Wal-Mart has changed its policy concerning the collection of sales tax on online purchases.

Some retailers said the move was to allow consumers to return purchases bought online to local stores. Many people believe the biggest motivation for the collection of sales tax came from the threat of the retailers being liable for all back sales tax not collected.

According to a CNET report dated February 6, 2003, the online retailers greatest complaints were “how to deal with customers in Colorado zip code 80212”, where right now the tax schemes range from 4.3 percent to 8 percent depending on where the person lives.

Stepping back to 2001, an interview with Utah’s then-governor Mike Leavitt, revealed the same arguments we find in today’s political environment:

What is fair to brick and mortar stores? States need that revenue from Internet sales. Can we simplify across the board for all states?

According to Governor Leavitt, “this isn’t about raising taxes, this is about a tax system that’s fair.” More recently, a February 26, 2011 commentary on CNN Politics relays: Because of two decades-old Supreme Court decisions, a state cannot require “remote sellers — any business without a physical presence in that state — to collect and remit sales tax.” Maureen Reihl, vice president of government relations for the National Retail Federation states, “some states have actually looked to try to require retailers to keep track of those things, or require you to keep track of those things. It becomes a privacy issue and a collection nightmare.”

Sales tax collection and remittance does not have to become a seller’s nightmare. Join our webinar, “Become Best-In-Class by Automating Sales and Use Tax Compliance” on Thursday, July 7, 2011 10:00 am PDT and learn how your business can benefit from sales tax automation!

Share This Post