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Down With The Internet Sales Tax Bill

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Posted 1st May 2013 at 09:57 AM by mattlaclear

A sales tax charged on Internet transactions: What is the government thinking?

If the politicians have their way, that's just what the law will require of any online retailer whose revenue tops $1 million a year.

If you agree with me that the proposed Internet sales tax bill could use a little work, you'll be glad to know that Rohit Arora is of the same opinion. In Internet Sales Tax Will Bite SMBs he tells you how the implementation of such a change could overwhelm any small Internet business.

A System of Serious Complexity

When conducting an ordinary brick-and-mortar sale, the merchant simply charges the customer the prevailing sales tax for the state and locality in which he does business. With online sales, however, the proposed Internet sales tax will work in a manner that's devilishly different. It would force retailers to implement variable tax rates based on the locality in which each customer resides.

Hundreds of Different Tax Rates Involved

At the current time, only five states have no sales tax. The remaining 45 do, as does the District of Columbia. Considering the numerous local variations, this equates to hundreds of different sales tax rates across the country. If the Internet sales tax bill should pass, it will force online retailers to not only compute each customer's sales tax by region but also submit the proper tax receipts to each of the assorted states in question.

I don't see how any small Internet business that’s forced to comply could fail to incur additional expense. The implementation of such a law might aid in filling the government's revenue coffers, but for an online seller, it could be a bad deal all around.
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