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Internet Sales Tax Limbo

  • Jan 5, 2015 | Gail Cole

If Congress does not tackle the issue of internet sales tax early in 2015, some states will take matters into their own hands. Indeed, they are already doing so, as evidenced by events in Illinois and Michigan.

An Amazon tax law took effect in Illinois on January 1, 2015. It requires any retailer or service provider having a contract with a person in Illinois to register with the state and collect sales or use tax, provided minimum sales are met and the in-state resident provides potential customers with some mechanism that permits out-of-state sellers to “track purchases referred by the person.” Such mechanisms include but are not limited to links on a website and promotional codes.

Many lawmakers in Michigan have long been pushing for the creation of an internet sales tax. Last month, they took a step closer to it when the Michigan Senate approved Amazon tax legislation. Governor Rick Snyder is in favor of a state internet sales tax and is likely to approve legislation that makes it to his desk. Support is not universal, however, and the measure may meet with even more resistance in the House than in had in the Senate, where 16 senators opposed it.

Other states gambled that federal online sales tax legislation would be implemented. Virginia linked its gas tax rate to federal internet sales tax, betting that Congress would pull through and pass a bill by the end of 2014. That didn’t happen, so on January 1, the Virginia gas tax rate increased.

No matter what sales tax changes are enacted in 2015, your business can facilitate compliance by implementing automated sales tax software as a service. Learn more.

photo credit: Images from SumAll 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.