US reviews e-commerce Sales Tax
- Aug 1, 2017 | Richard Asquith
The US Treasury has said that the administration will shortly revisit Sales Tax on goods sold by out-of-state e-commerce Sellers.
At present, Sellers with no physical location in another US state are not required to charge the Sales Tax of the state when the consumer is resident there. Instead, the consumer is obliged to voluntarily self-declare the tax in a usage report. In practise, there is very limited compliance with this obligation. This regime follows a Supreme Court ruling in 1992 – which did not reflect the massive explosion in cross-state e-commerce.
Many in-state online and bricks-and-mortar retailers claim this leaves them at a considerable competitive disadvantage to out-of-state retailers who effectively do not have to charge Sales Tax.
To change the current position, the US Congress must decide to change the legislation. The 2013 Marketplace Fairness Act laid the ground for this, and was passed by the Senate, but has since stalled.
The current administration now wishes to re-start this as there is a need to raise funding for infrastructure works.
Amazon, the largest US e-commerce player, is now charging Sales Taxes in all states where it is levied.
Many businesses are facing financial uncertainty, whilst online sales are a strong growth area. In response, we are giving an extra three months (15 for the price of 12) to AvaTax customers from now until September 30, 2020