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7 Out of 10 Shoppers Support Internet Sales Tax

  • Sep 12, 2014 | Gail Cole

 Survey says Americans don't want tax-free online shopping to kill Main Street.

According to a national poll released by the International Council of Shopping Centers (ICSC), 7 out of 10 Americans are in favor of federal legislation that would require online retailers to collect sales tax at the time of purchase.  The Marketplace Fairness Act (MFA) seeks to do just that.

Under current federal law, sellers without nexus in a state may not require out-of-state sellers to collect and remit sales tax on sales made to customers in that state.  Numerous states have made work-arounds with click-through nexus and similar legislation, whereby out-of-state sellers generating a certain amount of business through links on in-state websites trigger a sales tax collection obligation. Yet this remains a litigious practice that many states avoid.

Approved by the Senate in May 2013, the MFA then met resistance in the House Judiciary Committee. A year ago, committee chairman Bob Goodlatte (R-VA) released seven principals to guide the discussion of remote sales tax. In March of this year, the committee held hearings to flesh out the matter. Since then, nothing much has been said, aside from some talk of linking the renewal of the Internet Tax Freedom Act with MFA (ie, turning the two into one Marketplace and Internet Tax Freedom Act).

The Tax Foundation, a non-profit, non-partisan research organization, has urged the Supreme Court to step into the Internet sales tax fray: the “Court’s guidance is needed to reduce uncertainty for taxpayers and discourage state efforts to obstruct a constitutional system of interstate taxation.” Thus far, the Supreme Court has refused to get involved. However, it recently agreed to hear oral arguments for Direct Marketing Assn. v. Brohl, which challenges Colorado’s use tax notification law, in December. The Brohl in the case is the Executive Director of the Colorado Department of Revenue.

All this is a long-winded way of saying that Internet sales tax is not a new issue. This isn’t the first poll we’ve seen, nor is it likely to be the last.

The ICSC poll on online sales tax reveals:

  • 56% of Americans believe collecting sales tax from online-only vendors at the time of purchase is fairer to local retailers.
  • 70% of Americans support federal legislation that would require online-only sellers to collect sales tax at the time of purchase.
  • 82% of Americans think it would be easier to collect sales tax from online-only vendors at the time of purchase.
  • 93% of Americans say local retailers are important to their community’s economic health.

Is your business prepared for online sales tax? Automated sales tax software can help.

photo credit: derpunk via photopin cc

Sales tax rates, rules, and regulations change frequently. Although we hope you'll find this information helpful, this blog is for informational purposes only and does not provide legal or tax advice.
Gail Cole
Avalara Author
Gail Cole
Gail Cole
Avalara Author Gail Cole
Gail began researching and writing about sales tax in 2012 and has been fascinated with it ever since. She has a penchant for uncovering unusual tax facts, and endeavors to make complex sales tax laws more digestible for both experts and laypeople.