Early this year, the Senate approved a budget amendment that allows states to collect sales tax on internet purchases, even if the internet based retailer has no physical presence in that state. Before, internet based retailers had to collect sales taxes on purchases made by customers living in states in which the retailer has a physical presence. Most states require online retailers to collect sales tax on purchases made online even if the retailer does not collect it at the time of purchase.
The amendment aims to make sales tax rules uniform across the country. Although the bill is still in the works in a very uncertain Congress, it is very likely that this law will make it through the House at some point. Experts agree that even if the amendment goes before the Supreme Court, the Court could reinterpret the term “physical presence” and approve the amendment.
With this legislation, trading opportunities in large will grow for traditional retailers such as Walmart, Best Buy and Target, as well as online retailers such as Amazon and eBay. This legislation will also significantly change the online retail business market and the stock fundamentals of these companies, at least for the short term.
What this means for consumers is that they will have to pay more for online goods no matter what state they live in. It is likely that this legislation will lead to a patchwork system of enforcement that also relies on honesty from individuals across the country.
With this messy amendment, expect the price of online goods to increase. Small businesses that rely on online purchases will have to raise prices as well, causing the price of many local goods and services to increase as well. With this legislation, it makes sense for individuals to seek help when paying the bills every month.