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Sales Tax Collection by Remote Sellers - Pay Attention!
For many years, names like Amazon and eBay have dominated the debate about sales tax collection from online retailers. These online behemoths directly compete with brick-and-mortar retailers, have billions of dollars in annual revenues and have experienced consistent annual growth. Online business-to-consumer (B2C) retailers are the easiest illustrations of the perceived inequities between brick-and-mortar retailers and their online competitors. Taxand US discusses the competitive disadvantage sales tax collection creates for brick-and-mortar B2C retailers against online retailers.
The movement to require online retailers, known as remote sellers in the sales tax world, to collect sales tax gained momentum in 2011. The number of states enacting click-through nexus laws continues to rise, and there are now three federal bills aimed at requiring the collection of sales tax by remote sellers. Amazon has gone from litigating New York's click-through nexus law to supporting the Marketplace Fairness Act in just a few short years. This recent acquiescence by the largest online retailer may indicate that the online B2C retail industry is preparing itself for the possibility of mandatory sales tax collection.
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B2C remote sellers have been proactively involved with the movement to require remote sellers to collect sales tax because it is their business activities that have drawn the ire of in-state businesses and policymakers. We cannot assume that decisive federal action on state sales tax law is imminent because of the long list of unsuccessful proposed federal bills related to state tax. But if the momentum seen in 2011, which was highlighted by the support of the largest player in the debate (Amazon), leads to a federal bill on sales tax collection by remote sellers, sales tax collections on tangible personal property and digital goods sold by online B2C retailers will be largely addressed.