Magazine article Nation's Cities Weekly

Some Retailers Collecting Sales Tax on Internet Purchases

Magazine article Nation's Cities Weekly

Some Retailers Collecting Sales Tax on Internet Purchases

Article excerpt

Several Internet retailers began collecting sales taxes on purchases earlier this month on a voluntary basis--an action that will help states and local governments simplify sales and use tax administration and address severe budget shortfalls.

Ten large retailers, including Target, Wal-Mart and Toys R Us, reached an agreement forged by the Multistate Tax Commission (MTC) with 38 states and the District of Columbia. The companies agreed to collect taxes on remote sales transactions, even in states where they have no physical presence, or nexus. In exchange, the companies would not be audited for taxes on Internet sales that were not previously collected and remitted.

This agreement is a first step in creating a level of parity between online, multistate retailers and local brick-and-mortar stores that collect sales taxes. The agreement was reached after the Streamlined Sales Tax Implementing States approved an interstate sales and use tax compact last November.

Many state legislatures are considering adoption of the agreement to make state and local option sales and use tax administration more uniform and less burdensome for retailers.

According to the National Conference of State Legislatures (NCSL), about 30 states are considering legislation to authorize their participation in the interstate compact, which would become effective once 10 states with at least 20 percent of the United States population enact such legislation.

Once the interstate compact becomes effective, the National League of Cities, NCSL and other state and local government associations will seek approval by Congress for expanded duty to collect sales tax on remote sales. …

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