Attention, online shoppers. The days of tax-free online shopping may be coming to an end. More than a dozen states have enacted legislation or rules to force online retailers to collect sales taxes on purchases, according to tax publisher CCH. Similar legislation is pending in 10 states.
Budget shortfalls and heavy lobbying by retailers are just two reasons for the spread of online sales tax laws. The National Conference of State Legislatures estimates that uncollected state sales taxes will cost states $23bn this year. Residents of sales-tax states are supposed to pay taxes on online purchases, but because retailers don't collect them, they rarely do.
Retailers have long argued that exempting online purchases from sales taxes gives online retailers an unfair advantage over brick-and-mortar stores. The pressure escalated in December after online giant Amazon offered customers a one-day 5-percent discount if they used its Price Check app to make a purchase while in a physical store, says Jason Brewer of the Retail Industry Leaders Association, which supports taxing online purchases.
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