Should Congress force out-of-state retailers to collect sales taxes in states where they don’t have a physical presence?
As deputy editor David Katz writes in the introduction to this edition of Square-Off, “While online consumers have always been required to pay taxes to their states on online purchases, it’s a requirement that’s mostly been honored in its breach.”
There certainly seems to be good reason to require ecommerce vendors to collect sales taxes online. As Thomas Secor of the Durable Corp. writes, “The idea that a physical presence is a determining factor in sales transactions today is unrealistic and unfair. If a company produces a website offering products for sale on the internet, what difference is there between it and the local store, which many times offers free — and possibly next day! — delivery?”
Of course, no one wants to force the global online sales locomotive to slam on the brakes. Such sales taxes could pose a potentially huge administrative workload for online retailers. They would have to comply with the rules of many of the nation’s nearly 10,000 sales tax jurisdictions.
The critical question, as Arthur Rosen of McDermott Will & Emery writes, may be this: “How much of a burden is appropriate for a government to impose on sellers who operate outside that government’s borders but that are sending goods (physical or digital) or providing service to residents within those borders?”
What do you think? Should online retailers be required to collect state sales taxes everywhere? Please use the comments section below to share your thoughts. CFO will publish the best comments in a future story.