NACS Presses for Equal Treatment on Web Sales Taxes
11/18/99

NACS is urging the congressionally appointed Advisory Commission on Electronic Commerce (ACEC) to level the playing field on Internet sales taxes.

At present, web retailers are only required to collect sales taxes on purchases from customers located in states or local taxing districts where the retailer has a physical presence, such as an office or warehouse. Most Internet merchants have physical connections to just two or three states, which means most of their customers can avoid paying sales taxes—clearly placing bricks-and-mortar merchants at a competitive disadvantage.

In a letter to the commission, NACS quoted newspaper stories describing how some college students decided to buy their textbooks online in order to duck sales taxes the local college store would have had to charge. NACS also pointed out examples of textbook web sites that are promoting the lack of sales tax as a reason for students to shop online.

However, there is substantial public resistance to Internet sales taxes. As of ACEC's Nov. 15 deadline for accepting written comments, hundreds of individuals and organizations had sent in letters opposing Internet sales taxes.

ACEC's 19 members will meet Dec. 14-15 in San Francisco, CA, to continue discussions on whether Internet purchases should be subject to sales taxes. The commission is also examining taxes on Internet communications and tariffs on international e-commerce. The group is supposed to deliver its recommendations to Congress in April, however, the commission may have trouble reaching consensus.

Last week ACEC Chairman James Gilmore, governor of Virginia, said he planned to submit a proposal calling for a permanent moratorium on sales taxes on Internet purchases. Gilmore's action was not a surprise; Virginia is home to numerous Internet companies.

Another commissioner, Mike Leavitt, governor of Utah, intends to propose a voluntary system for states to collect sales taxes on all Internet retail purchases. Leavitt's plan has backing from the National Governors Association, which is concerned about Internet commerce eroding state tax revenues and harming local business. A number of other plans, both pro and con on Internet taxes, have also been submitted for ACEC's consideration.

Several pieces of legislation have also been introduced in Congress to prevent creation of sales taxes on web purchases. Last week two representatives from Ohio, John Boehner and John Kasich, introduced yet another bill to block any Internet sales taxes.

Related Links:

"Resolution Would Ban Taxes on International E-Commerce" (NACS, 10/1/99)
"Senate Bill Freezes Internet Sales Taxes Forever" (NACS, 9/24/99)
"E-Commerce Panel Pursues Proposals for Tax Simplification" (NACS, 9/16/99)
"Sales Tax to Top E-Commerce Commission's Agenda" (NACS, 9/10/99)
"Federal Bill Creates Tax on Web, Catalog Sales" (NACS, 8/2/99)
"Online Shopping Survey Shows Tax Makes a Difference" (NACS, 7/13/99)
"Federal Commission Kicks Off Internet Tax Talks" (NACS, 6/21/99)

Sound Off!

Bill Murphy (murphywf55@hotmail.com) 11/22/1999 12:31:52 PM

I agree the playing field should be leveled. Let,s recommend that sales tax be abolished on retail textbook sales.

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