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Legislation could mean online sales tax

Posted August 2, 2010

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— Analysts figure that nationwide, states are losing about $23 billion a year in uncollected sales taxes on Internet purchases.

A bill in Congress called the Main Street Fairness Act could change that.

The bill, introduced in the U.S. House of Representatives last month by Massachusetts Democrat Rep. Bill Delahunt, would help states retrieve lost revenue that goes uncollected because of complex, outdated sales tax rules across the country.

The legislation provides congressional authority for the states to simplify and streamline their sales tax systems.

To date, 24 states have entered into the interstate compact, which contains a uniform set of guidelines. The bill does not compel any state to join, but those that choose to adopt the system would then have the authority to require online retailers to collect and remit sales taxes the same way that local businesses do.

Supporters of the bill say it is an issue of fairness and competition and it will help ensure that online retailers are playing by the same rules as local retailers.

Gov. Bev Perdue supports the effort to tax all online purchases. She believes a successful solution has to come from the federal level.

 Legislation could mean online sales tax

"It's kind of like immigration reform," she said. "You can't have 50 different systems, which is where the states are headed now. You've got to have a national system."

Currently, locally owned stores like Quail Ridge Books in Raleigh have to charge a sales tax. Online competitors, like Amazon.com, only have to charge sales tax if a purchase is made in a state where they have a physical presence.

In other states, residents are supposed to self-report online purchases when filing their tax returns. But many consumers do not.

In North Carolina, for example, for the 2008 tax year, 109,003 tax returns were filed that reported online purchases. The total amount was $5 million.

"I did not ever think there'd be an unlevel playing field like this," said Quail Ridge owner Nancy Olson said.

She believes the online retailers work off an unfair business model. One she says is causing many local businesses to go under.

"Amazon is even hurting the chain stores," Olson said. "Some of them are ready to go down."


This story is closed for comments.

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  • raleighraines Aug 5, 2010

    After reading most of the comments about this story, it is very clear that people have no idea what they are talking about. Go ahead and blame the Democrats for this if you are clueless! Politics have NOTHING to do with this. F.Y.I. - Quail Ridge Books does sell online. They also PAY state taxes on ALL online sales. NO IT IS NOT A LEVEL PLAYING FIELD, END OF STORY!!!

  • raleighraines Aug 5, 2010

    To those who prefer to make this story a personal or political issue, which some have done. GET THE FACTS! Mrs. Olson is RIGHT about this issue. You know what to do with your lame, unwanted two cents!!!

  • Tom Servo Aug 3, 2010

    bvaccaro: Why do you start with the assumption that the state is automatically entitled to sales tax?

    When I place an order online with a retailer in Massachusetts, what service is the state of North Carolina providing in that transaction that renders upon the state the authority to tax the transaction? If none, then what am I paying for?

    We should be demanding the same kind of accountability from the public sector that we demand from the private sector. If you went to order something on Amazon and they attached a 15% "convenience fee" to your order, would you continue to place the order? Or would you ask, "What the heck is a 'convenience fee' and why is Amazon trying to collect it from me?"

    In the private sector, you can at least take your business elsewhere. In the public sector, you're bound by law to comply, so we should be all the more vigilant. Stop assuming that taxes are an inevitability and start demanding accountability. It's YOUR money, not the state's.

  • bvaccaro Aug 3, 2010

    I agree with the proposed legislation. This is not a new tax. The Main Street Fairness Act is simply modernizing the law to catch up with the reality that so much shopping is now done online. The consumer is already responsible for reporting and paying the tax. Understandably though, many consumers don't keep track of every purchase and report them. It makes more sense for the seller to collect the tax, just as a bricks-and-mortar store does. Technology makes is easy for anyone to open a Web business, manage inventories, use target marketing, calculate shipping etc. Technology has solved this problem also. There are services available that comply with the Streamlined Sales Tax agreement, at no cost to the merchants.

  • HadEnough Aug 3, 2010

    My two cents worth.
    Nancy Olson must be a democrat.

  • ohmygosh Aug 3, 2010

    Right on Tom. What is needed is for the brick and mortar stores to also compete on the internet. That would be the best of all worlds.

    Here there simply are not the stores. We have to buy via internet to find anything at all. Internet is like the Sears Catalog and US Post Office used to be 100 years ago. Heck they used to deliver stoves, chickens and anything else to your door.

  • dlb800 Aug 3, 2010

    Hey, Listen to BO.. he said your taxes aren't going up while he's the Prez!

    Listen to him, he NEVER lies.

  • Moabit Aug 3, 2010

    Nancy Olsen has it all wrong. Convenience is the key word here. I do not want to pay taxes on things such as Amazon purchases but if they have to charge it because North Carolina is greedy I will still buy stuff online. The reason businesses are not surviving is because if I have to drive 1 hour to get to Raleigh just to get to her store so I can experience a real person talking to me... well, I rather shop online.Saves me gas money.Apparently even the people in Raleigh do not use her store that much. So small business will go under even if they charge taxes online. They just have more to chose from and it is more convenient. I do not think she thought it all the way through.

  • yellowhorses Aug 3, 2010

    I don't shop on line because there is no sales tax. I shop on line because of the prices, selection, no traffic, no crowds, and no nasty sale people.

    Oh well, I suppose they will figure out a way to tax all that too.

  • Tom Servo Aug 3, 2010

    All I can say is that the horseless carriage industry is putting horseshoe makers out of business! It's not fair! The government should do something to make it harder to sell horseless carriages so horseshoe makers can continue to thrive for centuries!

    Newsmonkey summed it up well. The world is evolving and brick and mortar stores are becoming less relevant, and for good reason. Adapt. No one owes you a living, especially when you're clutching to an antiquated business model, and tyring to stay afloat by punishing customers and competitors who have adapted is petty & corrupt. Of course the fed is jumping all over this, because that's what they do--find ways to dupe us into thinking we need them to take our money. Shame on us for empowering them.

    BTW, nice fluff piece, WRAL. I'm surprised I didn't see the words "think of the children" somewhere within.