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2010 Internet Sales Tax Drum Beat Sounds Awfully Familiar

The little drummer boy from the holiday season of 2009 is playing the same old beat in 2010. In late 2009 we saw online shopping take on a new persona, rather transform into a potential sales tax revenue behemoth for many struggling states. The increase of online sales from 2008 to 2009 could be an indication of a new era in shopping behaviors for consumers. At the sames time, States are keeping a close eye on the last frontier for sales tax revenue as their budget deficits are likely to continue to decline well through 2010.

South Carolina last year lost $94 Million in uncollected internet sales taxes according to a study by the University of Tennessee (located here). In 2010, that revenue is expected to climb to $110 million. What is perhaps even more staggering is from 2007 to 2010 the state is predicted to lose $569.3 million in unpaid e commerce sales taxes.

An article out of the Los Angeles Times on Christmas Even 2009 points out an even larger problem out West in the great state of California. The article (found here) points out that California officials are estimating sales tax revenue losses of more than $1B (yes, that is B as in BILLION) from online shoppers that have failed to pay CA use tax from purchases made online where no sales tax was collected.

If you thought that 2010 was going to be the year that the internet sales tax drum beat died, guess again. 2009 will be looked upon in following years as a pivotal year for finding better ways for States to collect sales tax revenue from online purchases.

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