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Ramping Up the Fight to Tax Internet Sales, Ctd.

It looks like the push from Amazon and Walmart for a tax on Internet sales may carry enough weight to win over (or at least neutralize) our lawmakers who are, for the most part, terminally squeamish about even the smallest tax. I was admittedly skeptical, but an Internet sales tax is an increasingly real possibility. In fact, in the wake of Wednesday's Commerce hearing, Bob Sullivan says it's "all but inevitable."

One point sure to get lost or ignored if some kind of bill actually passes is that, strictly speaking, this is not a new tax. Here's Jay Rockefeller, the bill's cosponsor:

"The sales tax remains just as it is," Rockefeller said. "Instead, this new bill would finally give states the flexibility to control taxes that are currently owed under existing law, but in a way that doesn't unnecessarily burden taxpayers with sifting through receipts and pulling out their own calculators to crunch numbers. It's a simple idea with support from both Republicans and Democrats."
As Rockefeller explains, West Virginia residents -- who are losing as much as $103 million in sales taxes annually due to online sales -- are "required to calculate the amount of goods purchased online and claim them on their state tax returns." In other words, what they do not pay at the point sale is, theoretically, collected later in the form of a "use tax." As it happens, many people do not pay said tax, and Rockefeller's Act would shift the burden from the customer to retailer.

Another point that opponents will conveniently ignore is that each of the bills under consideration -- the Main Street Fairness Act (which is stalled in the House), Marketplace Equity Act and Marketplace Fairness Act -- contain exemptions. The Marketplace Fairness Act, for example, exempts sellers up to $1 million in gross annual sales. This gives genuinely small online businesses a bit of a cushion.

In any case, it's worth keeping an eye on these bills. As Sullivan reports, if a federal Internet sales tax law gets passed by Congress and kicked upstairs to the White House, Obama (or Romney) will surely have no choice but to sign it.